27679370 Economic Development Strategy Chino Airport

ECONOMIC DEVELOPMENT STRATEGY: CHINO AIRPORT

Prepared for: County of San Bernardino August 2007

CBRE CONSULTING

CBRE CONSULTING

355 South Grand Avenue, Suite 1200

Los Angeles, CA 90071-1549

T 213 613 3750 F 213 613 3780

www.cbre.com August 30, 2007

Mr. Brian P. McGowan, Economic Development Agency Administrator Economic Development Agency 215 North D. Street, Suite 202 San Bernardino, CA 92415-0043 Re: Highest and Best Use & Economic Development Strategy – Chino Airport Dear Mr. McGowan: CBRE Consulting (“CBRE”) is pleased to submit our report to San Bernardino County, which evaluates the current uses and income potential from the existing real estate assets and determines the development potential of surplus land surrounding the Chino Airport. Our findings confirm that there is strong regional demand for aviation uses at the airport and reinforces the importance of the airport to the regional economy to increase employment and tax revenues to the local communities and the County. CBRE Consulting has analyzed the financial returns from various development alternatives, and made recommendations for land use designations within the surrounding airport area to maximize the overall return to the airport and local governments. CBRE believes that coordinated planning of a new Airport Layout Plan (“ALP”), together with initiating an FAA de-obligation process for up to 100 acres of commercial/industrial land can accommodate the future aviation growth and provide tremendous economic development opportunities for the County and the cities of Chino and Ontario:

• Provide noise buffers to new residential development • Increase educational and workforce training opportunities • Increase airport revenues • Improve airport services • Increase skilled employment opportunities • Increase the local tax base

Our analysis is presented in detail in the attached report. We appreciated the opportunity to assist the County with this important issue. Sincerely,

Thomas R. Jirovsky Senior Managing Director

TABLE OF CONTENTS

I. INTRODUCTION.........................................................................................................................1

BACKGROUND.................................................................................................................................... 1 DATA SOURCES................................................................................................................................... 2 FAA ASSURANCE 25 ............................................................................................................................ 2 FAA LAND RELEASE REQUIREMENTS ......................................................................................................... 2 EXISTING CONDITIONS ......................................................................................................................... 4

II. EXECUTIVE SUMMARY ...............................................................................................................9

INDUSTRIAL TRENDS ............................................................................................................................. 9 AVIATION TRENDS................................................................................................................................ 9 ATTRACTING NEW INDUSTRIAL/OFFICE DEVELOPMENT................................................................................. 9 ECONOMIC BENEFITS OF ALTERNATIVE USES............................................................................................ 10 FAA RULES....................................................................................................................................... 11 RELEASING LAND FOR NON-AERONAUTICAL USE...................................................................................... 11 PRIVATIZATION OPPORTUNITY............................................................................................................... 12 RECOMMENDATIONS.......................................................................................................................... 12

III. REGIONAL ECONOMIC GROWTH..........................................................................................15

INTRODUCTION ................................................................................................................................ 15 RETAIL MARKET TRENDS....................................................................................................................... 15 INDUSTRIAL MARKET TRENDS ................................................................................................................ 17 MANUFACTURING TRENDS................................................................................................................... 17 FUTURE INDUSTRIAL TRENDS ................................................................................................................. 18 COMPETITIVE SUPPLY OF INDUSTRIAL BUILDINGS........................................................................................ 19 INDUSTRIAL LAND VALUES.................................................................................................................... 23 MANUFACTURING EMPLOYMENT TRENDS ............................................................................................... 26

IV. AIRPORT DEVELOPMENT: CASE STUDIES ...............................................................................28

OVERVIEW........................................................................................................................................ 28 MONROE AIRPORT, CHARLOTTE, NORTH CAROLINA.................................................................................. 28 SCOTTSDALE AIRPARK: SCOTTSDALE, AZ ................................................................................................. 28 WILLIAMS GATEWAY AIRPORT, MESA, AZ ................................................................................................ 29 VAN NUYS AIRPORT, VAN NUYS, CA ..................................................................................................... 30

V. GENERAL AVIATION TRENDS..................................................................................................32

CHINO AIRPORT – ECONOMIC STRATEGY AUGUST 2007

BACKGROUND.................................................................................................................................. 32

VI. SOUTHERN CALIFORNIA REGIONAL AIRPORTS SURVEY........................................................38

REGIONAL AIRPORTS .......................................................................................................................... 38 AIRPORT GROUND LEASE POLICIES ........................................................................................................ 42

VII. COMPARATIVE LOCATION ANALYSIS ...................................................................................46

WORKFORCE .................................................................................................................................... 46 QUALITY OF LIFE ...............................................................................................................................46 REAL ESTATE COSTS ........................................................................................................................... 49 COST OF DOING BUSINESS ................................................................................................................. 50 CONCLUSIONS ................................................................................................................................. 52

VIII. LONG-TERM ECONOMIC BENEFITS .....................................................................................54

OVERVIEW........................................................................................................................................ 54 REVENUE COMPARISON OF AIRCRAFT FACILITIES VS. INDUSTRIAL DEVELOPMENT............................................... 54 CITY ECONOMIC BENEFIT.................................................................................................................... 54 CONCLUSION .................................................................................................................................. 55

IX. CNO REAL ESTATE ASSETS .....................................................................................................56

CHINO AIRPORT LEASES ...................................................................................................................... 56 CHINO AIRPORT MASTER PLAN ............................................................................................................. 56

X. STRATEGIC PLAN & RECOMMENDATIONS ..............................................................................59

CHINO AIRPORT – ECONOMIC STRATEGY AUGUST 2007

I. INTRODUCTION

BACKGROUND

San Bernardino County, which owns Chino Airport (CNO), has recently adopted the Airport Master Plan prepared by Coffman Associates, Inc. in Dec. 2003, and CNO has received dozens of unsolicited proposals to develop various aviation facilities throughout the Airport. The overall goal of this study is to development strategies to increase revenues for the airport, as well as tax revenues for the County and job creation for the entire Inland Empire. The specific tasks to be addressed included:

1. Examine regional economic growth Historic supply of industrial bldgs / absorption / vacancy Comparative industrial land values Survey brokers for corporate clients benefit from nearby corporate jet service

2. Case studies of other municipal airports in U.S.

Types of tenants at general aviation airports – success stories 3. Survey Southern California regional airports

Inventory number of aircraft and other business based at airport Gather ground lease rates/policy Determine typical rents for hangar space Opportunity to capture overflow demand

4. Project Growth in General Aviation Demand

Review 2003 Chino Master Plan projections Look at transfer potential from Rialto and other airport closures How much land is needed to support general aviation over next 25 years?

5. Analyze CNO estate assets

Inventory land and buildings at CNO Review tenant proposals to determine which are critical for airport operations

6. Chino area economic development assessment for attracting new industries

Quality of life/education/work force Tax rates/real estate costs

7. Prepare Strategic plan for attracting target industries/tenants and increasing revenue

Determine amount of surplus land that may be available within the fence Recommend potential tenants for on-airport land and immediately adjacent land Suggest policies for establishing ground rent for new lessees Recommend criteria for selecting developer/tenants

CHINO AIRPORT – ECONOMIC STRATEGY 1 AUGUST 2007

DATA SOURCES For this study, CBRE Consulting toured the airport facilities, interviewed San Bernardino County and Chino airport officials, airport tenants, as well as industrial real estate brokers familiar with the Inland Empire and areas surrounding other Los Angels and Orange County airports. Among the reports and publication reviewed were:

December 2003 Airport Master Plan for Chino Airport FAA Assurance 25 Federal Register – Policy and Procedures Concerning Use of Airport Revenues California Budget Project: Policy Points January 2007 UCLA Anderson Forecast – December 2006 Rose Institute/Kosmont Cost of Doing Business Survey 2005 July 2006 Ventura County Rent and Fee Schedule Department of Airports Economy.com CB Richard Ellis Market Snapshots

FAA ASSURANCE 25 In the FAA Authorization Act of 1994 and the Aviation Reauthorization Act of 1996, Congress adopted Assurance 25 to ensure that airport users are not burdened with hidden taxation for unrelated local services. Per the FAA, using fees, charges or other payments received by the airport for purposes other than capital and operating costs of the airport or local facilities operated by the airport is unlawful. The FAA also prohibits free land for aeronautical purposes, as well as land rental for non-aeronautical purposes at less than fair market value.

FAA LAND RELEASE REQUIREMENTS The FAA Airports Division publishes a sponsor guide in which in lists guidelines and procedures that FAA sponsored airports should follow when leasing airport land to non-aeronautical tenants. Below are excerpts from the Land Release Requirements pertaining to non-aeronautical uses. Use of Airport Property for Non-Aeronautical Use Any property described as part of an airport in an agreement with the United States or defined by an Airport Layout Plan (ALP) is considered to be "dedicated" or obligated for airport purposes by the terms of the agreement. In addition, airport sponsors may acquire property for airport purposes with Federal financial assistance under many different programs. An approved Airport Layout Plan (ALP) or Land Use Plan may indicate that some of this property is excess to the airport's present or future aeronautical needs. Benefits in the use of this property for non-aeronautical purpose may be identified. As airport property, however, there are certain obligations covering the use of this property, which must be met before the land can be used or disposed of for non-aeronautical uses. Approval of a release of obligations on the property for sale or lease is based on a demonstration that such disposal will produce an equal or greater benefit to the airport than retention of the land.


Land Release Request: For the FAA to consider a request, the owner must provide details on the circumstances and intents for the use of the property. These include, among others, answers to the following questions:

• What agreement(s) with the United States are involved?

• What specifically is being requested (long-term lease, release, transfer, sale, etc.)?

• Why the release, modification, amendment or other action is requested?

• What facts and circumstances justify the request?

• What requirements of the state or local law should be provided for in the language of a FAA issued document if the request is consented to or granted?

• What property or facilities are involved?

• How the property was acquired or obtained by the airport owner?

• What present use is made of any property or facilities involved?

• What use or disposition will be made of the property or facilities?

• What is the Fair Market Value (FMV) of the property or facilities?

• What proceeds are expected from the use or disposition of the property and what will be done

with any net revenues derived?

• Provide a comparison of the relative advantage or benefit to the airport from the sale or other disposition as opposed to retention for rental income.

• Provide a plan identifying the intangible benefits if any, accruing to the airport, the amount

attributed to the intangible benefits of the merit of their application as an offset against the FMV of the property to be released. The plan should also include as a minimum,

o A statement of the airport's source and application of funds for the proceeding 3

years,

o A statement of future sources and application of funds needed for the continued operation and maintenance of the airport,

o A financial statement of financial capabilities and intent to accomplish the airport

development included in the current NPIAS, and

o Must be shown to be in accordance with the ALP.


After receiving public comment, if the FAA determines that the land is not needed for present or foreseeable airport purposes the FAA could consent to the release subject to various restrictions outlined in the sample deed of release. Leasing of airport land not needed for aeronautical use is preferred to the sale of the land since it provides continuous income for airport purposes and will preserve the property for future aeronautical usage. Airport property, which is not needed to accommodate an aeronautical use, can be leased for a non-aeronautical use, which is compatible with airport operations. The exception is land transferred by a quitclaim deed under Section 16/23, which contains provisions precluding all non-aeronautical activities. If not used for aeronautical purposes it will revert to the conveying agency. The lease shall be established at the fair market rental rate to maximize the revenue for the airport. The fair market rental rate shall be determined by obtaining a competent independent appraisal and/or by direct comparison with prevailing rentals of comparable property. The airport sponsor must submit to the Airports District Office (ADO) the request for to change the ALP and Exhibit A to using the property for non-aeronautical use. Should the ADO determine that the request can be approved it will be done so via a letter of approval for long term leases non-aeronautical use on airport dedicated property with no option to buy. Short-Term Lease (Less than 3 Yrs.) A request to lease airport land for non-aeronautical use for a period less than 3 years is considered an interim use and undergoes a less formal approval process. The request for an interim use should contain the information requested under Land Release Request except that an appraisal of fair market rental value is not required. A discussion of how a fair rental value was determined should be included. Approval of the interim use will also be made by via letter in lieu of the Deed of Release.

EXISTING CONDITIONS Chino Airport was developed in the 1940’s as a flight school for military personnel. In 1948 ownership of the 860-acre airport was transferred to San Bernardino County. In 1960 the airport was opened to the public. Since 1982 over $57 million has been invested by the FAA through the Airport Improvement Program. The airport has three runways, Runway 3-21 at 4,919 feet, Runway 8L-26R at 4,838 feet and Runway 8R-26L at 7,000 feet, which is long enough to accommodate the largest private jets. Runway 26R has a precision instrument landing system. There are approximately 45 hangar buildings on the airport totaling 1.3 million square feet 25 Conventional hangar buildings – 475,000 square feet plus 173,000 in museum space 25 T-hangar/executive hangars total 702,000 square feet 66 Port-a-Port hangars encompass 60,000 square feet The Airport currently houses approximately 1,000 planes, a 50 percent increase from 1980 levels. This includes approximately 300 vintage planes housed in museums. Despite the increase in planes


CHINO AIRPORT – ECONOMIC STRATEGY

5 AUGUST 2007

housed at CNO, the annual flight operations have decreased by one-third since 1990, as shown in the table below.

CNO Annual Flight Operations

Itinerant Operations

Local Operations

Total Operations

1990 116,469 122,813 239,2821995 106,961 73,319 180,2802000 85,227 75,502 160,7292006 Est. n.a. n.a. 166,000

Source: FAA Traffic Activity, CNO Airport The Airport Master Plan which was recently adopted, has identified the facilities required to accommodate the forecasted future demand from growth in aeronautical operations and activity at Chino. The Master Plan has also identified land that is not expected to be needed for those new aeronautical facilities. The airport land that is not expected to be needed for new facilities that would accommodate increases in airport operations and activities is designated as “Aviation Related Commercial Industrial” uses. Aeronautical Facilities Requirements Estimating the amount and nature of future aeronautical facilities required begins with a projection of the increase in airport operations and activities. Key aspects of the operations and activities that will have a bearing on facilities requirements are the total number and type of aircraft based at Chino. Table 2J in the Master Plan presents a forecast of aircraft that are expected to be based at Chino by 2025. The forecast used in the Master Plan to determine additional facilities needs estimated 1,375 aircraft will be based at Chino by 2025, which represents a 38% increase over current levels. The high-end forecast projected 1,484 aircraft or almost 50% growth. Turbojet aircraft based at Chino were projected to increase from 64 in 2001 to 112 in 2025, representing a 75% growth rate. Those larger aircraft require both larger hanger space than general aviation aircraft and extensive ground support services. Based on the projections of additional aircraft, Table 3G in the Master Plan presents the number of new hanger space and tie-downs that would be required. It is estimated that an additional 333 hanger spaces and seven new tie-downs would be required. The land necessary to construct those new facilities is incorporated into the Master Plan. An aerial view of the Airport is on the next page, followed by local and regional maps.


Chino Airport – Current Site Plan


Map of Chino Airport - Local Context

Chino Airport

Chino Hills

Corona

Map Width = 20.0 Miles

Ontario


Map of Chino Airport – Regional Context

II. EXECUTIVE SUMMARY CBRE believes that coordinated planning of the airport and the adjacent undeveloped land to accommodate the aviation growth and indirect business development by the County and the cities of Chino and Ontario will provide tremendous benefits to the entire community:

• Provide noise buffers to new residential development • Increase educational and workforce training opportunities • Increase CNO revenue • Improve airport services • Increase skilled employment opportunities • Increase the local tax base

INDUSTRIAL TRENDS The Los Angeles metro area is the largest industrial market in the U.S. With over 1.2 billion square feet of inventory and continued demand for large warehouse/distribution centers by retailers importing goods through the L.A./Long Beach Ports, almost all available industrial land has been developed outside of the higher elevation Antelope Valley and Victorville areas. As a result, land values have risen dramatically in L.A. and Orange Counties to as much as $2 million per acre. Unfortunately, these massive warehouse buildings, which range from 100,000 to 1 million square feet in size, generate little in the way of jobs and tax revenues.

AVIATION TRENDS Although use of corporate and private jets have seen a tremendous increase since Sept. 11th 2001, private ownership of general aviation aircraft statewide have been flat to downward trending in the past 15 years. However, the Inland Empire has seen steady growth in registered aviation ownership, along with its population growth. Corporate jets, charter services and fractional ownership are seeing significant growth, as busy executives/indivduals avoid security delays at commercial airports. Because of airport capacity and noise issues at John Wayne, Fullerton, LAX, Santa Monica and Van Nuys airports, CNO is well positioned to capture an increasing share of the regional growth. Interviews with more than a half dozen lessees indicated strong demand for high-end jet hangars at CNO from existing facilities at John Wayne Airport and others.

ATTRACTING NEW INDUSTRIAL/OFFICE DEVELOPMENT On a comparative location analysis perspective, the Chino area is very competitive with areas surrounding other general aviation airports in Southern California. The development of The Preserve residential development in Chino offers both benefits in providing relatively affordable quality housing and recreation amenities for new companies seeking to relocate, and challenges to continued growth in the airport operations, if homes are built too close to the airport runways.

CHINO AIRPORT ECONOMIC STRATEGY 9 AUGUST 2007

Cities of Chino/Ontario Comparative Ranking – Location Factors

Santa

Monica Long Beach Fullerton Van Nuys

El Segundo

Chino & Ontario

Composite Score

Weighted Total Score 163.0 239.5 243.0 208.5 212.5 268.0

Composite Index

Relative to Chino/Ontario 0.61 0.89 0.91 0.78 0.79 1.00 Source: CBRE Consulting

ECONOMIC BENEFITS OF ALTERNATIVE USES The current lease rate at CNO is $0.023 per square foot per month. This equates to a “fee simple” land value of approximately $3.50 per square foot, well below current market rate of approximately $10.000 to $15.00 per square foot for industrial land values in the region. However, it is important to note that airport land typically will lease at a moderate discount to unrestricted land in the area. Our analysis shows that industrial development on excess airport land will generate five times greater ground lease revenues than any aeronautical use. However, due to the high value of corporate jets, the County property tax revenues from high-end jet aeronautical uses will exceed industrial uses.

Annual Revenue to San Bernardino County Alternative Land Uses at CNO

Hypothetical 10 Acres Industrial T-hangars Corp. Jet Hangars

Building area 250,000 250,000 250,000Total Assessed Value $50 million $20 million $115 million County Property taxes @ 25% $125,000 $50,000 $300,000Lease revenue $500,000 $100,000 $100,000 Total Revenues $625,000 $150,000 $400,000

Source: CBRE Consulting

City of Chino The City will benefit in many ways from the implementation of the economic development strategy outlined in this report. It will benefit through its share of real and personal property taxes, and sales taxes on fuel purchases from various airport developments as shown below.

Annual Revenue to Chino

Hypothetical 10 Acres Industrial T-hangars Corp. Jet Hangars

Total Assessed Value $50 million $20 million $115 million City Property taxes @ 10% $50,000 $20,000 $115,000Sales Taxes 4,000 2,000 5,000 Total Revenues $ 5,000 $22,000 $120,000



By encouraging more aviation–related business park/light industrial and commercial development on undeveloped land adjacent to the airport, the City can receive significantly greater economic benefits from manufacturing and R&D and their indirect spending impacts, than from typical large warehouse/distribution uses than are dominating the development pipeline, as shown below.

City of Chino Economic Benefits Warehouse vs. Industrial Uses

Hypothetical 100 Acres Warehouse Manufacturing R&D

Permanent Jobs 400 5,000 10,000Total Assessed Value $130 million $300 million $520 million City Property Taxes @ 10% $130,000 $300,000 $520,000Business Sales Taxes /1 200,000 1,000,000 500,000Employee Retail Sales Taxes 40,000 500,000 1,000,000Total City Revenues $370,000 $1,800,000 $2,020,000

/1 Reflects manufacturing/warehouse site as point of sale for retail sales taxes Source: CBRE Consulting

FAA RULES Because significant airport improvements were financed with FAA funds, there are restrictions on San Bernardino County’s ability to utilize the revenues from the airport for any non-aeronautical purpose. The FAA also limits the ability to allow non-aeronautical development within the “fence” of airport property, unless it can be shown that there is sufficient land to accommodate current and future aeronautical needs. The County will need to undergo an update to the Airport Layout Plan (“ALP”) for the FAA and initiate a de-obligation process for the commercial/industrial parcels to facilitate the broader economic development objectives.

RELEASING LAND FOR NON-AERONAUTICAL USE The 2004 Master Plan designates approximately 140 acres of land for “aviation-related” commercial or industrial uses, in three main areas 1) 70 acres along Euclid Avenue, 2) 33 acres on south side of airport on Kimball Avenue and 3) 38 acres in the northeast corner, with access from Merrill Avenue. This designation is based on the Master Plan having first identified the amount of airport land that would be necessary to accommodate the projected increase in aircraft based at Chino by 2025. It is important to note that the Master Plan defines “aviation related commercial/industrial uses as land that has no airfield access and thus can be used for “alternative uses which enhance airport operating revenues”, and which can include “manufacturing, warehouse, office and retail uses”. Aviation Demand Because of the strong demand forces, future aeronautical demand could be significantly higher than is estimated in the master plan. Consequently, it would be prudent for any commercial/industrial leasing program to focus on the land that would be the least suitable for aeronautical uses.


The 2004 CNO Master Plan projects growth of approximately 375 CNO based planes and 64,000 more flight operations by 2025. Based on this forecast, the plan identifies the location of sufficient hangar space to accommodate the growth in demand and also identifies four specific land areas totaling approximately 140 acres that could be developed for non-aeronautical uses.

Non-Aeronautical Land Available at CNO

Active Planes Growth Rate

CNO Active Aircraft - 2025

All CNO-based Aircraft - 2025

Excess Land Available

Master Plan Baseline 46% 1,175 1,375 140 acres Alt #1 50% 1,200 1,400 135 acres Alt #2 60% 1,280 1,480 115 acres Alt #3 75% 1,400 1,600 85 acres Alt #4 100% 1,600 1,800 35 acres


It is estimated that if the growth in active aircraft based at Chino is as much as 75 percent, it would leave approximately 85 acres of land for potential commercial/industrial use.

PRIVATIZATION OPPORTUNITY Major Wall Street firms are investing massively in public infrastructure projects across the U.S. on long-term leases that generate billions of dollars for public agencies and improve service to the public through low-cost capital and improved operating efficiencies. Companies have been acquiring airports, with over 100 privatizations since the landmark 1987 sale of the British Airport Authority. The City of Chicago is now considering the lease of Midway Airport to raise money to fund needed improvements at O’Hare. With a proper master plan CNO can be an attractive asset to the investment community and provide millions of dollars in unrestricted funds to the County, under a long-term lease.

RECOMMENDATIONS Through proper planning that encourages light industrial, manufacturing and R&D development, the Chino Airport (“CNO”) and surrounding undeveloped land will be a valuable asset for Chino, Ontario and all of San Bernardino County. The Airport, if improved with quality FBO’s and large jet hangars will provide significant employment opportunities and substantially increasing tax revenues. Our case study research found that Scottsdale Airport in Arizona has developed into a national model for airport-based business parks, having been achieved through the efforts of community leaders, access to a sizeable regional employment base and the City’s zoning of the surrounding area. Scottsdale Airport/Airpark is headquarters for over 25 national and regional corporations; home to more than 2,200 businesses; and a workplace for more than 42,000 employees.


CNO Airport With current land lease rates at $0.02 per square foot per month, it is imperative that the County update the leasehold appraisals, before soliciting/accepting new lease proposals. With current market rates for land, the airport would likely realize over $1 million in increased annual revenue from just the new lease proposals in hand. CBRE recommends the County take a proactive approach to encouraging new hangar and FBO development oriented toward high-end jets that are currently located in L.A. and Orange County. These jets, which are typically owned by large businesses, will provide the County substantial tax revenues and employment growth. By developing new facilities for 100-200 high-end jets, the County and local jurisdictions could receive in excess of $10 million in annual property taxes. With new housing available in Chino and Chino Hills, and development of light industrial and R&D buildings in the area, there is the potential to attract thousands of new industrial/office jobs. The Master Plan designates approximately 140 acres of land for non-aeronautical commercial or industrial uses, based on having identified the amount of land that would be necessary to accommodate the projected increase in aircraft operations based at Chino by 2025. This land could be made available to commercial or industrial users via market rate ground leases. Given the Airport’s mandate to provide for growth in aeronautical needs for the long-term, it is prudent to anticipate even greater growth in aeronautical demand, especially from the high-end corporate jets that are being squeezed out of Los Angeles and Orange County airports. Even allowing for as much as 75 percent growth in active aircraft at CNO, CBRE believes that it would be prudent to develop a commercial/industrial leasing program the focuses on the approximately 70 acres of the commercial/industrial designated land located on the western end of the Airport that is least suitable for aeronautical use. Since the future development opportunities are hard to predict, it may be prudent to initially release only 30-40 acres for immediate development of an industrial business park. While the CNO Master Plan accommodates the implementation of the majority of our economic development initiatives, CBRE recommends that the Master Plan undergo some minor adjustments to develop non-aeronautical uses along Kimball Avenue and relocate existing and future hangars and FBO’s from the south side to minimize future problems with the burgeoning residential development. As part of the Plan update, it may also make sense to relocate the vintage aircraft museums from their home off Merrill Avenue and relocate them to the southeast quadrant of the airport where current aviation aircraft activity presents problems with the new residential community.

Chino and Ontario Adjacent Undeveloped Land The land adjacent to the airport is subject to State mandated airport land use planning requirements, as well as numerous planning efforts which have been initiated (i.e. New Model Colony and The Preserve). CBRE recommends that the cities of Chino and Ontario and the County co-ordinate broad planning guidelines encompassing the Airport and the surrounding +/-1,000 acres of undeveloped land that will encourage retail, office business park uses and light industrial / R&D development and discourage big box warehouse distribution centers on increasingly scarce industrial-


zoned land, except in runway approach zones, where number of employees is restricted, to minimize truck traffic and increase employment and tax revenue opportunities. With the tremendous development occurring in the area, Euclid Avenue is becoming a major commercial thoroughfare. With the new housing and growth in airport activity, additional retail and lodging facilities will be needed to serve both the airport and the community. For non-aeronautical land uses, the Cities and the County should establish minimum guidelines for job creation and private investment to prevent large distribution centers or other types of warehouses from taking the valuable industrial land. CBRE suggests a minimum threshold of 1.5 employees per 1,000 square feet of building and a private investment target of $3 million per acre. An exception could be made for large warehouse users that are large point of sale retail sales tax generators. With the development of a new 100-acre Chaffey College campus in Chino just a few miles west of the airport, and the new University Hall in downtown Chino, there is an opportunity to create various aviation related training programs to encourage the growth of the industry in the County.


III. REGIONAL ECONOMIC GROWTH

INTRODUCTION

According to the City’s general plan (shown on the following page), the areas immediately surrounding CNO represent a wide range of land uses, including residential, commercial, industrial, public/institutional, recreational, and agricultural uses. To the west, the general plan designates a large acreage of land to open space and recreational uses, as well as industrial and agricultural space. Areas to the east of the airport are designated for airport related, public facility and agricultural uses. The area surrounding the airport is undergoing major land use changes. Historically predominant agricultural uses are giving way to industrial, residential and commercial uses. The Chino Valley Dairy Preserve, 15,500 acres of unincorporated County land has been annexed by the cities of Chino and Ontario. Almost 10,000 new housing units with a wide range of product types are planned to the east and south of the airport. Approximately 500 homes are already occupied at price ranges from $400,000 to $800,000, averaging approx. $200 per square foot of floor area.

RETAIL MARKET TRENDS

The West San Bernardino County retail market has seen steady growth, averaging nearly 200,000 square feet in completions each year due to economic factors such as strong job creation, population growth and residential development and affordable land. Annual absorption has outpaced new construction, resulting in a substantial decline in the vacancy rate, reaching 3.8% in 2006, which is the lowest it has been in over a decade. Rental rates have increased by 50 percent since 1996.

Exhibit III-1 Retail Market Trends

West County 1

INVENTORY ACTIVITY

Year Total Inventory Completions Vacancy Rate Net Absorption Rental(SF) % (SF) Rate

1996 7,256,000 346,000 10.5% 232,000 $13.941997 7,342,000 86,000 9.3% 162,000 $14.421998 7,342,000 0 8.1% 88,000 $14.901999 7,582,000 240,000 6.2% 365,000 $15.632000 7,582,000 0 5.5% 56,000 $16.212001 7,580,000 598,000 6.1% 550,000 $16.352002 7,936,000 356,000 4.8% 440,000 $16.572003 7,966,000 30,000 4.4% 61,000 $17.402004 8,152,000 186,000 5.7% 69,000 $18.042005 8,327,000 175,000 3.8% 329,000 $19.612006 8,470,000 143,000 3.8% 132,000 $20.90

Source: REIS 2007; and CBRE Consulting

1) The West County Retail Submarket includes the cities of Chino, Chino Hills, Ontario, Rancho Cucamonga, and Upland.


City of Chino - Existing General Plan Land Use Designations


INDUSTRIAL MARKET TRENDS The Los Angeles Metro area has the largest industrial base in the U.S. with over 1.2 billion square feet of industrial land. The vast majority of all new industrial space built in the last decade is for large scale distribution warehouses, averaging several hundred thousand square feet each and requiring access for large 18-wheel trucks and trailers. These industries bring very few jobs, with employment estimated at less than one job per every 2,000 to 5,000 square feet, or 1/10th the level of typical service sector jobs.

According to data from the LAEDC “L.A. Stats,” L.A. County’s non-farm employment is at or below 1990 levels, with manufacturing down 40 percent from 812,000 jobs to less than 500,000 as of year end 2004. The only categories with significant growth are health care, leisure/hospitality and government. The growing labor force and real estate in the Inland Empire has attracted jobs. According to a recent L.A. Times story highlighting the statewide trend of employment growth toward inland counties, “Inland jobs’ growth beats coast’s 5 to 1,” Riverside and San Bernardino have actually seen an increase in manufacturing jobs, as well as jobs in every other category. While industrial jobs are an important economic resource for every major city, it is important to focus on which industry to attract. The 21st century has brought a new industrial revolution, based on new technologies that present a new paradigm for communities to compete for jobs. MANUFACTURING TRENDS The December 2006 UCLA Anderson Economic Forecast contained a special report on the transformation of manufacturing in southern California, stating the following: In the 1960’s Los Angeles County was a major industrial center with four automobile factories and half dozen aircraft manufacturing plants. Manufacturing jobs represented 31 percent of all personal income. L.A. lost the auto and aircraft jobs in the 1970’s and 1980’s, and other nondurable manufacturing jobs have been lost in the past decade as clothing and other manufacturers have moved offshore. Today manufacturing jobs represent only 10 percent of personal income. Manufacturing employment in the U.S. has declined by 5 million since 1990 (~20 percent). Los Angeles has lost 500,000 jobs (~40 percent) in the same time period due to high cost of living and incentives offered by other states to attract companies. Although continued job loss is expected in many manufacturing areas, UCLA is optimistic for the future in the knowledge-based component – i.e. the front-end of the manufacturing process. While machine operator jobs have continued to decline at a rate of 5-10 percent per year in Los Angeles since 2001, fashion and industrial design and engineering jobs have grown 50 percent since 2002. Aggressive economic development initiatives and land use planning for CNO and the surrounding commercial industrial areas can attract those small to medium sized business that can not afford to remain in Los Angeles or Orange County.


FUTURE INDUSTRIAL TRENDS The Center for Continuing Study of the California Economy has just published its annual report on economic growth prospects for the State of California. Highlights are summarized below.

• California is the 8th largest economy in the world with a gross annual product of $1.6 trillion. • 36 percent of new jobs will require a college degree (up from 25 percent currently). • Los Angeles MSA is expected to add 1.2 million new jobs over next decade, primarily in the

fields of foreign trade, professional services entertainment and tourism. • Regions that create great places to live and work can expect the greatest growth in jobs. • California has the potential to add 3 million new jobs in the next decade. • Professional services are expected to grow by 30 percent in ten years (+600,000 new jobs). • Education and health care are expected to grow by over 40 percent (+650,000 new jobs). • Wholesale trade is expected to grow by over 10 percent (+ 100,000 new jobs). • Diversified manufacturing is expected to lose 80,000 jobs. • Apparel manufacturing is expected to lose 50 percent of its jobs (although fashion design and

wholesale will continue to grow). These manufacturing job trends are summarized in the table below.

Exhibit III-2 California Diversified Manufacturing Jobs

1994 – 2015 (In Thousands)

Type 1994 2000 2005 2015 1994- 2000- 2005-Est. 2000 2005 2015

Wood Products (except Sawmills) 29.1 35.5 31.5 36.7 6.4 -4.0 5.2Primary Metal Products 27.7 30.9 25.2 20.5 3.2 -5.7 -4.7Fabricated Metal Products 139.3 173.3 140.7 136.6 34 -32.6 -4.1Machinery 90.7 108.5 82.7 72.7 17.8 -25.8 -10.0Electrical Equipment & Appliance 37.3 44.1 33.1 27.4 6.8 -11.0 -5.7Transportation Equip. (exc. Aerospace) 54.9 62.7 56.4 59.2 7.8 -6.3 2.8Furniture & Related Products 58.4 76.7 60.3 62.7 18.3 -16.4 2.4Medical Equipment & Supplies 41.6 51.8 47.7 50.5 10.2 -4.1 2.8Other Miscellaneous Manufacturing 40.9 51.5 40.6 38.3 10.6 -10.9 -2.3Beverage Products 27.9 33.0 37.9 37.3 5.1 4.9 -0.6Textiles 31.7 37.6 29.4 21.2 5.9 -8.2 -8.2Apparel 123.9 122.6 80.7 36.5 -1.3 -41.9 -44.2Paper Products 35.9 35.4 28.1 29.7 -0.5 -7.3 1.6Chemicals (except Pharmaceuticals) 42.3 43.7 40.0 38.3 1.4 -3.7 -1.7Plastics & Rubber Products 65.3 73.1 56.6 52.1 7.8 -16.5 -4.5Leather Products 8.7 7.0 4.1 0.1 -1.7 -2.9 -0.9

Diversified Manufacturing 855.4 987.8 794.7 723.0 132.4 -193.1 -71.7

Source: 1994-2005 -- EDD; 2015 -- Center for Continuing Study of the California Economy (CCSCE)


COMPETITIVE SUPPLY OF INDUSTRIAL BUILDINGS Overview Increasingly, developers and users alike are looking to the Inland Empire for their industrial needs. Its availability of space left to fill, proximity to the coast, intricate transportation network, and low lease rates are all working to lessen any preference gap between other Southern California markets and the Inland Empire. Historic Supply At 235 million square feet, the Inland Empire West makes up nearly two thirds of the Inland Empire’s overall industrial market. Over the past decade, the submarket has seen an average of 10.6 million square feet of new product absorbed each year. Exhibit III-3 shows historic industrial trends for the City of Chino, Inland Empire West and the Inland Empire. Forecast Torto Wheaton Research estimates that over the next six years net absorption in the Inland Empire will average 25.4 million square feet per year. Availability rates are forecasted to decline, dropping to 6.4 percent from the current 7.0 percent, while rents are forecasted to rise substantially. Both Inland Empire submarkets are expected to outperform the region over the next two years.


Exhibit III-3 Industrial Market Trends (Including Manufacturing, Warehouse, and R& D Space)

City of Chino and Inland Empire West 1

INVENTORY ACTIVITY

Year Total Inventory

SF (000) Completions (000) Availability Rate

% Net Absorption

SF (000)

City of Chino 1,490

1996 17,355 96 7.9 1791997 18,392 1,037 9.0 9511998 18,860 468 8.9 6821999 21,653 2,793 9.9 2,0332000 23,388 1,735 7.8 1,2902001 26,031 2,643 13.7 1,2482002 27,684 1,653 9.6 3,0272003 28,810 1,126 9.0 4682004 31,048 2,238 12.2 1,4912005 32,579 1,531 7.4 3,4382006 33,652 1,073 4.5 1,077

Inland Empire West 10,693

1996 122,086 4,868 8.7 4,0771997 129,880 7,794 9.3 6,9061998 136,744 6,864 9.5 6,8011999 149,863 13,119 9.7 11,1012000 168,597 18,734 8.9 18,2502001 182,272 13,675 11.0 6,3522002 191,501 9,229 10.6 10,7242003 199,437 7,936 9.4 10,7572004 210,063 10,626 8.3 11,0752005 218,601 8,538 5.6 12,7362006 234,840 16,239 6.3 13,998

Inland Empire 1

1996 196,233 5,447 8.7 4,0461997 205,764 9,531 9.0 9,3451998 214,433 8,669 9.8 7,1491999 229,544 15,111 9.8 13,0212000 251,082 21,538 8.6 22,5272001 270,118 19,036 10.0 10,1542002 283,817 13,699 9.9 15,0642003 296,616 12,799 8.9 16,3632004 312,746 16,130 7.3 19,1542005 330,943 18,197 5.5 19,6332006 360,795 29,852 7.0 21,168

Source: Torto Wheaton Research; and CBRE Consulting

1 Inland Empire West includes the cities of Chino, Fontana, Mira Loma, Ontario, Rancho Cucamonga, and Rialto.


Even with a recent construction boom in the eastern portion of the Inland Empire, the Inland Empire West seems to provide more versatility with 22 percent of its existing buildings being over 100,000 square feet, compared to only 12 percent of the existing buildings in the Inland Empire East being over 100,000 square feet.

With industrial development trend in the Inland Empire leaning heavily towards warehouse and distribution structures, growth in manufacturing space has slowed in recent years (exhibit III-4). This has made availability rates for manufacturing space the lowest among industrial its industrial counterparts, both within the City of Chino as well as in the larger Inland Empire (exhibit III-5). In the last quarter of 2006, manufacturing availability rates in Chino and the Inland Empire were 4.8 percent and 7.7 percent, respectively, as compared with general industrial availability rates of 5.6 percent and 7.9 percent.

Exhibit III-4 Industrial Inventory Trends – Manufacturing and R& D Space

Inland Empire West and the City of Chino 1996 – 2006

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Mil

lio

n S

F

Inland Empire West 27,964 29,364 30,170 30,423 31,222 31,818 31,975 32,285 33,769 35,198 35,344

CIty of Chino 5,288 5,343 5,658 5,658 5,755 5,797 5,797 5,797 5,807 5,835 5,860

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: Torto Wheaton Research; and CBRE Consulting


Exhibit III-5 Industrial Snapshot by Size

Inland Empire Q3 2006

Base Under Construction Vacancy Rates Availability Rates

Building Count

Building SF (000) % Share

U/C Buildng Count

U/C Building SF (000)3

Vacant SF (000)

Vancany Rate 1

Available SF (000)

Availability Rate 2

By Size

Inland Empire West 10,000-19,999 941 12,716 5.8 46 606 473 3.7 981 7.7 20,000-29,999 379 9,190 4.2 22 521 337 3.7 725 7.9 30,000-39,999 223 7,649 3.5 4 134 126 1.7 567 7.4 40,000-49,999 146 6,376 2.9 1 45 309 4.9 519 8.1 50,000-59,999 128 6,894 3.1 0 0 278 4.0 548 8.0 60,000-69,999 72 4,556 2.1 1 67 0 0.0 376 8.3 70,000-79,999 50 3,741 1.7 0 0 144 3.8 363 9.7 80,000-89,999 47 3,961 1.8 0 0 0 0.0 165 4.2 90,000-99,999 42 3,989 1.8 0 0 188 4.7 281 7.1 100,000 AND GREATER 585 162,004 73.3 14 3,772 3,635 2.2 7,795 4.8 Inland Empire West 2,613 221,077 88 5,144 5,490 2.5 12,321 5.6

INLAND EMPIRE TOTAL 4,465 329,484 171 22,962 10,539 3.2 20,057 6.1 Source: CBRE Inland Empire Industrial MarketView, 3Q 2006 Includes all existing industrial buildings, 10,000 SF or greater in size. 1 Vacancy rate is vacant SF in existing buildings divided by total GLA of existing buildings. 2 Availability rate is available SF in existing buldings divided by total GLA of existing buildings. 3 Under Construction SF includes in escrow to users or pre-leased buildings which totals 5.2 million SF

Vacancy rates for smaller sized industrial buildings (10,000 - 30,000 sf) in the Inland Empire West, were 3.7 percent, slightly higher than the overall vacancy rates for the entire region. However, the following exhibit shows that availability rates for manufacturing space, which tend to be smaller in size, dropped from 7.7 percent to 5.5 percent, between the last two quarters of 2006. This is well below vacancy rates for warehouse space.

Exhibit III-6 Inland Empire West Industrial Availability Rates

2006: Q3 and Q4

Availability RatesTotal Manufacturing Warehouse R&D

SubmarketCurrent

QtrLast Qtr

Current Qtr

Last Qtr

Current Qtr

Last Qtr

Current Qtr

Last Qtr

Chino 5.6 3.7 4.8 4.8 5.5 3.2 40.5 40.5 Fontana North 13.4 10.9 0.0 0.0 13.9 11.5 na na Fontana South 6.4 6.3 9.4 5.5 6.4 6.5 0.0 0.0 Mira Loma 1.2 3.9 4.0 2.9 0.4 4.3 0.0 0.0 Ontario 6.8 6.3 14.0 7.9 5.7 6.0 6.4 8.9 Rancho Cucamonga 6.2 5.1 3.3 3.3 6.5 5.2 17.2 17.2 Rialto 3.3 5.1 0.0 4.2 3.4 5.1 n/a n/a Subtotal: Inland Empire West 6.3 5.9 7.6 5.1 6.0 5.9 10.3 11.6

INLAND EMPIRE TOTAL 7.9 6.7 7.7 5.5 7.8 6.8 11.5 12.8 Source: Torto Wheaton Research; and CBRE Consulting


Rental Rates In terms of pricing, the Inland Empire has experienced a consistent rise in asking net lease rates with the exception of a few fluctuations from quarter to quarter. At the close of the third quarter of 2006, average asking net lease rates were at $0.43 per sq. ft. Higher rates are seen in the 10,000–49,999 SF range for both the East and West with respective rates of $0.53 per sq. ft. and $0.49 per sq. ft.. In contrast, the lower respective rates for buildings with 100,000 SF or greater of availability were $0.40 per sq. ft. and $0.39 per sq. ft.

Exhibit III-7 Average Asking Lease Rates

Inland Empire Q4 2003 – Q3 2006

Source: CBRE Local Market Reports

INDUSTRIAL LAND VALUES The maps on the following pages illustrate industrial land values in a local and regional context. The map of Chino and Chino Hills lists land sales between 2003 and February of 2007, with average and median prices per square foot having doubled in the last few years. The second map, covering the Greater Los Angeles Basin, illustrates how industrial land values per square foot in the Inland Empire ($10-$20 psf) are significantly more affordable than Los Angeles and Orange County ($30-$45 psf).


CHINO AIRPORT ECONOMIC STRATEGY

24 AUGUST 2007

1) Includes sales through 2/15/07

Recent Land Sales Cities of Chino and Chino Hills: 2003 - 2007 YTD 1


Greater Los Angeles Basin Industrial Land Values PSF: Fourth Quarter 2006

MANUFACTURING EMPLOYMENT TRENDS 1

According to a recent report published by the California Budget Project, in the past decade and a half, California has experienced a shift of its employment base to inland areas. Inland counties contributed 54.4 percent to the state’s job growth between 1990 and 2005, compared to just one in five California jobs having been located inland in 1990. More than half of the state’s job growth in trade, transportation, and utilities; public administration and natural resources, mining, and construction took place in inland counties. In addition, nearly half of the state’s job growth in financial activities occurred inland. Growth in the number of jobs within inland counties has been larger than the population growth. In fact, while Los Angeles County lost 2.9 percent of its jobs between 1990 and 2005, Riverside and San Bernardino Counties experienced sizable job growth in the fifteen year timeframe, growing nearly 90 percent and 60 percent, respectively. Specifically, as California has lost hundreds of thousands of manufacturing jobs in recent decades, manufacturing has expanded in inland counties. Between 1990 and 2005, the number of manufacturing jobs in inland counties increased by nearly 50,000 (19.4 percent), reaching more than 300,000 jobs in 2005. The greatest gains in inland manufacturing jobs occurred in Riverside County, which added 18,400 jobs (55.3 percent), and San Bernardino County, which added 23,900 jobs (53.6 percent). Moody’s Economy.com notes that the Riverside-San Bernardino Metro Area (which includes Riverside and San Bernardino Counties) is one of the few California metro areas in which manufacturing forms a foundation for long-term growth. It is the one area where plentiful land is available, where labor costs are reasonable and where the local policy environment is favorable for manufacturing. Rising wages represent a shift in manufacturing toward more higher-value goods such as aerospace components.

1 Sources: California Budget Project: Policy Points January 2007, by Alissa Anderson Garcia; Moody’s Economy.com, December 2006; Torto Wheaton Research


Exhibit III-8 Non-farm Employment Trends and Forecast by Industry Sector

Inland Empire 1990 - 2012

Historic Projections

1990 2000 2005 2007 2012

Construction 63,000 74,700 116,100 129,300 147,404Manufacturing 78,700 117,800 120,900 124,900 129,445Wholesale and Retail Trade 120,000 159,800 209,300 230,400 263,003Transportation, Warehousing and Utilities 23,500 46,900 59,100 66,000 76,519Finance, Insurance and Real Estate 33,000 35,200 48,100 53,300 58,366Services 239,100 348,100 429,700 469,000 532,445Government 149,100 193,500 223,200 232,700 255,709

Total 706,400 976,000 1,206,400 1,305,600 1,462,890

% Growth1990-00 2000-05 1990-05 2005-07 2007-12

Construction 18.6% 55.4% 84.3% 11.4% 14.0%Manufacturing 49.7% 2.6% 53.6% 3.3% 3.6%Wholesale and Retail Trade 33.2% 31.0% 74.4% 10.1% 14.2%Transportation, Warehousing and Utilities 99.6% 26.0% 151.5% 11.7% 15.9%Finance, Insurance and Real Estate 6.7% 36.6% 45.8% 10.8% 9.5%Services 45.6% 23.4% 79.7% 9.1% 13.5%Government 29.8% 15.3% 49.7% 4.3% 9.9%

Total 38.2% 23.6% 70.8% 8.2% 12.0% Sources: California Employment Development Department; and CBRE Consulting

According to Economy.com, the Riverside-San Bernardino Metro’s economy is expanding, supported the manufacturing industry’s continued job growth in transportation and business and professional services. Expansion of commercial and defense-related aerospace manufacturing and maintenance, and expansion of rail capacity to accommodate international trade through the region, also continue to drive the economy. This growth in industrial employment will slow in acceleration however continue to expand at 2.4 percent per year over the next six years, according to Torto Wheaton Research. According to the United States Census data, there was a near 50 percent increase in total employment in the Inland Empire between 1990 and 2006, compared to a 22 percent growth in manufacturing employment within the same timeframe.


IV. AIRPORT DEVELOPMENT: CASE STUDIES

OVERVIEW The following case studies illustrate airports that have successfully implemented economic development strategies. As with Chino Airport, these general aviation and reliever airports are located near larger metropolitan airports. A common theme in each case is civic leaders and local and regional agencies joining forces in order to form the foundation of growth and development. Success has stemmed from the formulation of deliberate marketing strategies, community and business outreach programs.

MONROE AIRPORT, CHARLOTTE, NORTH CAROLINA Located in the booming Union County suburbs of Charlotte, North Carolina, the city of Monroe has successfully developed a strategy of recruiting a large nucleus of aerospace companies including ATI Allvac, Goodrich Corporation, Cyrill Bath Company and Caledonian Alloys around the regional airport. ATI Allvac was a local start-up company that has become a world leader in titanium and nickel-base supper alloy production that is used by most aircraft manufacturers today. Goodrich established there customer service headquarters in Monroe specializing in aircraft component repairs and overhaul. South Piedmont Community College provides workforce training programs for the aerospace industry, while University of North Carolina Charlotte provides masters degrees in specialized fields such as precision metrology.

SCOTTSDALE AIRPARK: SCOTTSDALE, AZ Scottsdale Airport, owned and operated by the city of Scottsdale since 1967, was first developed in the remote desert north of downtown Scottsdale in June 1942 as Thunderbird II, a civilian-operated airfield that provided initial flight training to 5,500 aviation cadets for World War II service. Closed in 1944, it was turned over to Arizona State College after the war for use as a vocational school for veterans. In 1953, when ASC (now ASU) no longer needed the facility, the Arizona Conference of the Seventh-day Adventists took over the buildings and field for its Thunderbird Adventist Academy high school. By the early 1960s, the Adventists decided that they had more land than they needed, and they found the city, chamber of commerce and others quite interested in having that excess land for a municipal, general aviation airport. When Scottsdale’s first general plan was drafted in the mid-1960s, it included zoning for the airport and a surrounding industrial park, both seen as potential economic engines for the growing city. When the Scottsdale Municipal Airport first opened in 1967, it had a single 4,800-foot runway and with a turn-around loop at each end, no hangars, no terminal or administration building, no control tower. The sole FBO served flyers from a mobile trailer and a gasoline fuel truck. Since then Airport has developed immensely, into a national model for airport-based business parks This success has been achieved through the efforts of City of Scottsdale community leaders, access to a sizeable regional employment base and the city’s zoning of the area. Several important factors have


contributed to the success of the Scottsdale Airport/Airpark - it is headquarters for over 25 national and regional corporations; home to more than 2,200 small to medium-sized businesses; with easy airport access and seven miles of taxiway access. Currently, Scottsdale Airpark boundaries are the Loop 101 Pima Freeway to the North, Thunderbird Road to the South, 90th and 96th streets to the East and 64th Street to the West. Of the Airpark’s approximately 2,900 acres, 2,580 acres are currently developed, with 2,554 companies in 110 business categories, employing approximately 50,450 people, in 788 buildings. Office buildings make up 35 percent of these, office/warehouse structures another 41 percent, 20 percent are retail/hotels, and about 4 percent are used as hangars. Zoning within the Scottsdale Airpark boundaries consists of Commercial Office, Light Industry, Hotel, and Commercial Retail. According to Jim Keeley of Colliers International in Scottsdale and Scott Gray, the Airport’s Manager, about 5% of the businesses are actually tied to the airport. These businesses are located on 300 acres of privately owned land, and include the corporate flight facilities of companies such as Discount Tire/Giant Industries, a Real Estate company, and a furniture manufacturing company. These types of companies use corporate jets from as much as several times a week to several times per month, with appropriate fees to the airport. General aviation aircraft usage includes employee travel by companies such as these, as well as charter flights. On another 300 acres owned by the airport, aviation related tenants include flight schools, fixed base operators (FBO), and aircraft storage, maintenance, and leasing companies. One of the most significant aspects of Scottsdale Airport is the major economic stimulus that it provides to the City of Scottsdale and the north Valley region. A recent study indicated that the airport generates more than $182 million annually in revenue to the region's economy and the combined annual impact of the airport/airpark is approximately $2.5 to 3.0 billion. The City of Scottsdale is known throughout the country as a community where quality of life and economic progress are synonymous. The outstanding facilities of the Airport and the life and amenities of the Scottsdale area have attracted a large number of businesses that desire to locate on or near the Airport. These same facilities and amenities draw general aviation and corporate business travelers from all over the country to visit Scottsdale for business and recreational purposes.

WILLIAMS GATEWAY AIRPORT, MESA, AZ

The Williams Gateway Airport was initially the Williams Air Force Base, at which over a span of 52 years, more than 26,500 men and women earned their wings. The Army Air Corps created its Advanced Flying School here in 1941 in preparation for the demands for World War II. The Base was the U.S. Air Force's foremost pilot training facility, graduating more student pilots and instructors than any other base in the country and supplying 25 percent of the Air Force's pilots annually.


Williams Air Force Base was closed in 1993 and created a loss of more than 3,800 jobs and $300 million in annual economic activity. The state and communities began work immediately to redevelop the base after the announcement of closure in 1991. The Governor's Economic Reuse Advisory Board was appointed to coordinate reuse efforts. The Williams Air Force Base Economic Reuse Plan was spearheaded by the Reuse Advisory Board and approved by the Governor of Arizona in 1992. The plan determined the base be developed as an aerospace center and an educational, research and training facility with the airport serving as a reliever to Phoenix Sky Harbor International Airport. Aeronautical uses identified included commercial passenger service, aircraft manufacturing, maintenance, modification, air cargo operations and flight training.

To work toward ownership and operation of the airport, an Intergovernmental Agreement Group (IGA) was established in 1992, which also created the Williams Gateway Airport Authority (WGAA). The airport officially opened in March 1994 and the WGAA was established in May 1994; this allowed the IGA to be dissolved. Today, the WGAA Board consists of the mayors from the City of Mesa and Towns of Gilbert and Queen Creek and the Governor of the Gila River Indian Community. Cooperation among the various jurisdictions surrounding Williams Gateway Airport, the campus and the business community, coupled with innovative planning efforts has set the stage for successful development of Williams Gateway Airport for civilian use.

Williams Gateway Airport has become a reliever to Phoenix Sky Harbor International Airport and serves a variety of aircraft including corporate, cargo, general aviation and military. The airport has three runways (10,401, 10,201, and 9,301 feet) which allow for access for aircraft operation from a single-engine Cessna to the Boeing 747-400. The Airport is also developing as an international aerospace center with aircraft manufacturing, maintenance, modification, testing and pilot training. Currently, more than 20 aeronautical companies operate on the facility, and the remaining 1,000 acres available for aeronautical company locations is in high demand. In access to the area's skilled labor force, year-round flying weather and access to international markets have made it a good location for global-minded companies.

Businesses at the Williams Gateway Airport include Boeing, whose aircraft refurbishing and testing operations occupy approximately 130,000 square feet. Most of its buildings are generally less than 22,000 square feet each. Native American Ambulance (aka Native Air Service) is an emergency care provider, which flies its aircraft out of the Williams Gateway airport and occupies a 30,000 square feet building. Other businesses include Cessna, whose aircraft maintenance and service centers occupy 100,000 square feet, and Embraer, with 60,000 square feet for aircraft maintenance and service center.

VAN NUYS AIRPORT, VAN NUYS, CA In 1928, through the establishment of a corporation by a small group of citizens, Van Nuys Airport was founded as a Metropolitan Airport, located on 80 acres of trees and farmland. The Airport is now located on 730 acres in the heart of the San Fernando Valley, approximately 20 miles northwest of downtown Los Angeles, and is one of four airports owned and operated by the City of Los Angeles. Van Nuys Airport has grown into the world’s busiest general aviation airport, averaging nearly 500,000 takeoffs and landings annually. The airport prides itself on meeting corporate, private and government


aeronautical needs, while in the process providing vital aeronautical services, enhancing efficiency at the region’s commercial airports, creating jobs, promoting business and serving as a community resource. Located in the heart of the San Fernando Valley, Van Nuys Airport ranks as the world's busiest general aviation airport. Dedicated to noncommercial air travel, Van Nuys Airport averages nearly half a million takeoffs and landings annually. Business travelers and tourists using private, corporate and charter aircraft benefit from the airport's convenient proximity to city business and entertainment centers. Business activity has continually grown at the airport. According to an economic study, Van Nuys Airport contributes more than $1 billion annually to the Southern California economy, supports over 10,000 jobs, generates an annual earnings impact of approximately $273 million and produces $73 million in state and local tax revenue by leasing space to a variety of tenants. More than 800 aircraft are based at Van Nuys Airport. The airport supports and attracts both aeronautical and non-aeronautical businesses in the San Fernando Valley area. The airport is home to over 100 businesses, including six fixed-base operators and numerous aeronautical companies. Van Nuys Airport also provides facilities for fire, police, air ambulance, search and rescue, and news media aircraft that serve the region. The airport’s property itself houses a major home improvement store, hotel, golf course complex and restaurants. Examples of the companies at Van Nuys Airport include six major fixed-base operators (FBOs): BaseNet, Clay Lacy Aviation, Maguire Aviation Group, Million Air, Raytheon Aircraft Services and Skytrails Aviation. These operators provide aircraft storage and parking, aviation fuel, aircraft sales, flight instruction, aircraft charter and aircraft maintenance. Some of the FBO’s also serve as major leaseholders of airport property, subletting land and buildings to other airport tenants. In addition, Van Nuys Airport serves as home to numerous companies that provide aviation support activities such as aircraft repairs, avionics, interior work. Other businesses included air tour services including Heli USA and Orbic Helicopter; aircraft sellers Classic Air, Elite Aviation, and Jet Set Aircraft; corporate flight operators such as Air Shamrock, Castle & Cooke Aviation Services, Dole Foods Flight Operations, Inc., Pacific Holding Company, Paramount Corp. Aviation, and Thornton Aircraft; as well as others including Duncan Avionics, Pacific Forecasting a

nd Superior Industries.

2000, Los Angeles World Airports, governing

ore recently developed is a partnership between

event, in order to pursue and offer internships and ies such as Syncro Aviation Inc., which remodels the

Inagency of the Van Nuys Airport, took a step to further address noise concerns by initiating a residential soundproofing program. MLos Angeles Unified School District’s Monroe High School, and San Fernando Valley Economic Alliance (SFVEA) to have aeronautical companies work directly with its students, to gain experience for future jobs. As a part of this partnership, Van Nuys Airport has been home the Aviation Career Day. Approximately 1400 students and 70 exhibitors attended the second annualcareer opportunities for high school students. Companinteriors of airplanes, and Chatsworth-based Global Aerospace Technology Corporation (GATC), were some of the exhibitioners in attendance. According to Steve Cormier, chief executive of GATC, though his company pays workers very well, it has a dire need for skilled workers. He has had so much difficulty hiring workers that he has considered moving his firm east.


V. GENERAL AVIATION TRENDS

BACKGROUND According to the Southern California Association of Governments’ (SCAG)2004 Regional Aviation Plan2, air passenger demand in the SCAG region will more than double, to 170 million passengers in 2030, and air cargo will more than triple, to 8.7 million tons in 2030. SCAG forecasts that a decentralized airport system is needed to maximize airport use in the Inland Empire and North Los Angeles County. The ripple effect of SCAG commercial airports approaching their physical or legal constraints on smaller airports is already occurring. This can be seen in the decline of general aviation activity at large regional airports. Market forces include increased costs associated with general aviation operations at the commercial airport, a more complex airspace environment and the safety factor of combining smaller propeller driven aircraft with multi-engine commercial jet aircraft. SCAG's commercial aviation plan expects continued growth of corporate activity at both suburban air carrier and large (urban and suburban) general aviation airports. Much of this corporate growth will be in the rapidly urbanizing portions of western Riverside and San Bernardino Counties. Historically, general aviation activity has declined since the 1980’s, much of this attributable to the flying retirement of WWII and Korean War veterans, as well as the discontinuation of various G.I. benefits in the 1970’s that promoted flying. In the 1990’s, a law was enacted limiting manufacturers’ liability to eighteen years after aircraft manufacture. This revitalized general aviation aircraft manufacturing. Concurrently, coordinated industry sponsored programs to promote flying were instituted nation-wide and corporate aviation, particularly business jet construction, grew tremendously, fueled in part by fractional ownership. General aviation ownership trends in California have actually been declining over the past decade.

Exhibit V-1 Number of Registered General Aviation Aircraft

State of California: 1998 – 2006

21,000

22,000

23,000

24,000

1998 1999 2000 2001 2002 2003 2004 2005 2006

No

. o

f G

A A

ircr

aft

However, according to general aircraft registration figures from the California Board of Equalization, growth in general aviation ownership in the Inland Empire has averaged about 2 percent annually. In 1998, the region made up about 12 percent of the state’s total general aviation aircraft ownership. By 2006, this number has grown to nearly 14.5 percent of the State’s total.

2 SCAG includes the six-county area of Los Angeles, Orange, Riverside, San Bernardino, Ventura, and Imperial Counties.


Exhibit V-2

Number of Registered General Aviation Aircraft Inland Empire: 1998 – 2006

2,400

2,600

2,800

1998 1999 2000 2001 2002 200

Nu

mb

er

of

G

10.0%

11.0%

12.0%

3,000

3,400

3 2004 2005 2006

A 13.0%

15.0%

3,200

Air

cra

ft 14.0%

Inland Empire Inland Empire as a % of CA

Source: California Board of Equalization; and CBRE Consulting

According to the FAA, the nation’s total general aviation fleet is forecast to grow 1.8 percent annually, between 2006 and 2010, over double its growth rate in the past six years. Longer term growth is expected to average about 1.4 percent annually.

Exhibit V-3 Total Gene Fleet (U.S) ral Aviation

Historical Trends and Projections: 1990 - 2020

100,000

90 92 94 96 98 00 02 04 06 08 10

150,000

200,000

250,000

300,000

19 19 19 19 19 20 20 20 20 20 20 2012

2014

2016

2018

2020

TOTAL GENERAL AVIAT ION FLEET

Projected Average Annual Growth:

2000 - 2006 : 0.7%2006 - 2010 : 1.8%

2010 - 2020 : 1.3%2006 - 2020 : 1.4%

Source: Federal Aviation Administration; and CBRE Consulting


Private Jet Industry The private jet industry has s e much more affordable in recent years, thanks to significant ad and manufacturing. Private jets now range anywhere from $300,000 for a small jet or single engine, to $45 million for a Falcon 7X or Gulfstream G500. The repercussions of September 11th have also added to the appeal of using private or chartered jets, as people have grown weary of wait times at airport security, so individuals are increasingly chartering aircraft to travel. An estimated 1,000 new corporate jets are expected to be built this year, almost double the level of 2003. Companies are making greater use of private and chartered jets, avoiding major airports for busy executives. Today, a larger percentage of affluent individuals and companies are utilizing private jets instead of facing the uncertainties, inconvenience and safety issues associated with commercial aviation. Private jets have more advanced technology, fully integrated networked cabin systems which connect laptops, printers, PDAs and other devices wirelessly. An article in June 21st New York Times citing the strong demand indicates that Texas billionaire, Robert Bass is funding a new supersonic private jet with a price tag of $80 million. Data from the FAA shows tremendous growth in on-demand air taxi and air tours uses3. Between 2003 and 2005, “on demand” general aviation aircraft uses have jumped from 5 percent of total hours flown, to over 14 percent. This category is primarily comprised of air taxi services, showing the expanding use of chartered flights by both individuals and businesses.

Exhibit V-4

een a rise in popularity as private jets have becomvances in engine technology

General Aviation and Air Taxi Percentage of Total Hours Flown by Actual Use

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%On-Demand CommercialUse (FAR Part 135)Other

1991

1993

1995

1997

1999

2001

2003

2005

Pe

rce

nt

of

To

tal

Ho

urs

Flo

wn

Sight See

External Load

Aerial Uses

Instructional

Corporate

Business

Personal

Source: Federal Aviation Administration; and CBRE Consulting

efined as “On Demand FAR Part 135 Uses,” this set of regula3

wD tions applies to general aviation aircraft used for commercial purposes, hich includes most chartered jet services.


According to the Aircraft Owners and Pilots Association (AOPA), the private jet manufacturing industry as experienced tremendous aircraft development and sales growth. Due to the size and complexity of

nother sign of growth is in how the past five years have seen the purchase of many of the nation’s leading

Interlink, Inc., a Houston-based private jet chartering company. Million Air perates as a franchise through a chain of 31 separate franchises across the US, Canada and the

airport, an airport of choice for corporate jet and rboprop activity. Million Air negotiated 50-year ground lease on the entire airport, less runway and

taxiways. Its plan is to reach out to the area and private individuals. Million Air Los Angeles expects that the high level of tertainment industry and downtown businesses will welcome “the Trans-Exec Air Service, whose high-end executive jets is based at Van Nuys Airport, is also rapidly expanding its fleet. These jets include amenities such as dual lavatories, gourmet kitchens and luxury sleeping accommodations. The company has taken much advantage of its popular executive jet and fractional ownership programs. These flat-fee programs were first introduced in the early 1990’s and their popularity has given Trans-Exec double digit profit margins for more than a decade. Berkshire Hathaway Co. is one of the industry’s largest jet charter companies, with a fleet of approximately 600 planes, and offers fractional ownership and rental of its jets. Fractional ownership starts at one sixteenth of a plane, and gives the fractional owner about 50 hours of flying time per year. AvJet Corp., of Burbank, and Blue Star Jets Inc. are two more major jet charter operators in the Los Angeles market. These, however, operate like a country club, where membership is limited to about 30 or 40 members who sign on with annual fees ranging from $600,000 to $2.5 million based on use. According to several industry sources, owners of private jets are usually entrepreneurs with dynamic new business ventures spanning various industries. They include Gordan Stewart, founder of Sandals Resorts; and Elon Musk, founder of PayPal and Space Exploration Technologies. According to Sonia Woo of Million Air Los Angeles, the FBO has seen similar patterns in owners of private jets, who are mostly individuals and aviation related LLC’s.

hthe product, manufacturing is closely tied with pre-orders for aircraft, making aircraft sales numbers closely aligned with the number of aircraft manufactured. In February of 2007 leaders of the General Aviation Manufacturers Association (GAMA) announced that shipments of every type of general aviation airplane increased in 2006 and the strong numbers have led to another record high in industry billings. The Los Angeles Times recently published an article in which it claimed that sales in the private-jet industry are expected to reach a record $17.6 billion this year, up from $15 billion in 2006. AFBO’s and FBO chains by larger companies seeking growth in the private aviation market. These companies recognize the opportunities created by a rapidly expanding private jet fleet and the limited airport space available for FBO’s. An FBO is essentially a refueling facility for aircraft that offers a variety of aviation-related services. Scheduled new aircraft deliveries will further stretch the capacity of the nation’s FBO’s. One example is Million Air oCaribbean, and now expanding into Europe. Its most recent operation is located at the Hawthorne Airport (named Million Air Los Angeles), which has historically been a piston engine, GA airport. Century Aviation Holdings, LLC, an investment and development organization, saw an opportunity to make Hawthorne Airport the “New Los Angeles Executive”tu

’s entrepreneurs corporate traffic driven by the en

new LA Executive” FBO at Hawthorne.


Transfer Potential from Rialto Airport In examining the potential impact from the closure of the Rialto Municipal Airport, CBRE Consulting contacted Epic Land Solutions, Inc., the consulting group behind the “Rialto Airport Relocation Plan, 2007.” According to Shannon Winder, the airport’s closing date was originally set for December of 2008, however depending on negotiations between the city and developer, Lewis-Hillwood Rialto LLC, tenants may be eligible to move out as early as April of 2007.

TInternational, however they will be moved to various airports, including Bracket and Chino airports, among others. Currently, only about 10 aircraft tenants have expressed interest in relocating to Chino, with some of them already on the airport’s waiting list. These are generally small planes such as Cessna’s, with the smallest hangar space requirement at 800 sq. ft. and the largest at about 6,500 sq. ft. Rialto Municipal

he Airport’s aircraft tenants were originally promised that they could all move to San Bernardino

Airport is within 20 miles of 10 other General Aviation airports, including the former orton Air Force Base, now known as San Bernardino International Airport (KBSD). The former Norton N

AFB, closed during a wave of base realignments in the early 1990s, still has military sized ramps, taxiways and buildings, including several hangars. There are 35 aircraft based there now. The map on the following page shows the airports which are located within a 20 mile radius of Chino Airport.


Chino Airport Airports within a 20 Mile Radius


VI. SOUTHERN CALIFORNIA REGIONAL AIRPORTS SURVEY Southern California’s major commercial airports have historically transferred both commercial and general aviation operations to smaller nearby airports, such as Van Nuys Airport and Ontario International. However these airports are increasingly reaching capacity as well. Van Nuys Airport has grown into the world’s busiest general aviation airport, averaging nearly 500,000 takeoffs and landings annually. Activity at Ontario International has been increasing steadily for the past 10 years. In 2005, 7.2 million passengers used the airport and 561,756 tons of air freight were shipped. The terminals built in 1998 were eight times larger than the airport’s former terminal and can accommodate up to 10 million passengers a year. However, when passenger traffic at Ontario International reaches 10 million in two consecutive years, a third terminal will be constructed. With the Inland Empire rapidly growing, so is traffic at Ontario International Airport, and will, more likely than not, have to be alleviated by transfer of general aviation to nearby airports. The recent popularity of the private jet industry, business uses of charter jets and fractional ownership have added to increasing jet activity in other Los Angeles and Orange County airports as well. Given the density of population and development in the area, residential homes are usually located within a few hundred feet of airports, and safety and pollution are becoming issues. City of Santa Monica residents have formed groups to fight the negative effects of the dramatic increase of private jets at Santa Monica Airport. The airport was originally designed for smaller aircraft and in the last 10 to 15 years, jet operations at the airport have skyrocketed, causing neighbors, some who are located within 300 feet of the runway, to worry about possible crashes. Chino Airport is strategically located at the convergence of Los Angeles, Orange, Riverside and San Bernardino Counties. With a more abundant supply of land, the Airport has the ability to capture the vast majority of regional growth in general aviation activity from Los Angeles and Orange County, as well as the western Inland Empire.

REGIONAL AIRPORTS

A review of the airports in the Los Angeles metro area has been made to identify and distinguish the type of air service provided. Information pertaining to each airport was obtained from FAA records. Corona Municipal Airport Corona Municipal Airport is located approximately 6 miles south of Chino Airport. The airport has a single, 3,200-by-60-foot runway and is uncontrolled. Corona Municipal is strictly a recreational airport. It is located on Army Corps of Engineers land, and is under the jurisdiction of the Parks and Community Services Department. The airport is operated with revenue generated from rental fees and state grants. The 15 businesses located at the airport offer a full range of general aviation services. Currently, there are 414 based aircraft at Corona Municipal Airport. Of these, 373 are single engine airplanes, 25 are multi engine airplanes and 10 are helicopters. The airport averages 186 flights per day, or about 60,000 annual operations. Approximately 74 percent are local aviation operations and 26 percent are transieneneral aviation operations. Currently all hangar space is occupied and there is a waiting list of pproximately 300.

t ga


Ontario Interna

ntario International Airport is located approximately 6 miles north-north east of Chino Airport. The irport is a member of the Los Angeles World Airports system and is owned and operated by the City of

Ontario International Airport is a medium-hub, full-service airport with commercial jet service to major

Ontario International’s 224 daily flights provide service to every major city in the U.S., on airlines

ntario International is also the center of a rapidly developing freight movement system that includes the airport, two railroads, four major freeways, and an expanding network of freight forwarders. Ontario

by 9 major U.S. air freight carriers including Airborne Express, Ameriflight, DHL, mpire Airways, Express Net, Federal Express, West Air, Union Flights, and United Parcel Service.

Ontario ternational Airport. This master plan will help guide the development of the airport through the year

al Airport’s role will be to serve the future aeronautical needs of the Inland mpire and the southern California region for both cargo and passengers. Demand for air transportation

n f Governments (SCAG) 2004 Regional Transportation Plan (RTP) predicts that regional passenger

ivately-owned, public-use airport located approximately 10 miles northwest of Chino irport in Upland, California.

tional Airport

OaLos Angeles. Although the airport’s primary role is to provide commercial air service to the area, the airport also serves general aviation activity. Founded in 1923 as Latimer Field, the City of Ontario purchased the 30-acre tract in the southwest corner of the present airport and named it Ontario Municipal Airport. By 1967 it was already the origination point of transpacific cargo flights as well as commercial service and became a part of the Los Angeles regional airport system. In 1993, the Los Angeles Board of Airport Commissioners approved final plans and specifications for a $270 million terminal expansion project and the "new" Ontario International Airport opened September 27, 1998.

U.S. cities and through service to many international destinations. Passenger traffic at Ontario International Airport has been increasing steadily for the past 10 years. In 2005, 7.2 million passengers used the airport and 561,756 tons of air freight was shipped.

including AeroMexico, Alaska, American, Continental, Delta, Jet Blue, Lineas Aereas Azteca,

Southwest, United, and US Airways. O

International is servedE Los Angeles World Airports is in the process of developing a new master plan for theIn2030. Ontario InternationEwill be created by the Inland Empire's rapid population growth as well as its growth as a manufacturing and distribution center. Furthermore, with limited potential for future expansion of LAX and other regional airports beyond their current capacities, Ontario International can be expected to play a vital role in fulfilling the future aviation needs of the Southern California region. The Southern California Associatioodemand will double by 2030, and that air cargo demand will more than triple. Cable Airport Cable Airport is a prA


A single 3,865 foot runway is available for use and the airport is uncontrolled. Approximately 360 ircraft are based at Cable Airport. Of these, 328 are single engine airplanes, 28 are multi engine

ating to a one and a half year wait for hangar space at the irport. Cable Airport is planning to add a large office hangar complex on the north side of the entrance

ing to SCAG, activity at Cable Airport is forecast to crease to 140,000 operations by 2030.

yoperated by the City of Riverside. Aeronautical ac1999, with much of the increase being from busines The airport has a 5,401-by-100-foot runway and a 48-foot runway. It averages approximately 280 aircraft operations per day, or about 102,000 per year. These consist equally of local and transient general aviation operations. There are approximatsingle engine airplanes, 35 multi engine airplanes,hangars are completely full.

ecast to reach nearly 185,000 operations per year, with a demand r 523 based aircraft. The airport has the ability to expand within its existing boundaries to support

rackett Field is located approximately 12 miles northwest of Chino Airport, near the Los Angeles County

l hangars and 100 tie owns, with some hangar space available.

iation Administration (FAA) and SCAG forecast that the airport will be host to 436,000 ircraft operations and 600 based aircraft by 2030.

aairplanes, and 4 are helicopters. The airport averages 252 aircraft operations per day, or about 100,000 per year, of which 80 percent are local general aviation operations and 20 percent are transient general aviation operations. Currently, all of the airport’s 252 hangars and 70 shadeports are occupied, and there is a waiting list of about 30 aircraft, equaroad which will have eight hangars each with attached office space. The Southern California Association of Governments (SCAG) has forecast commercial activity at Ontario to increase five-fold through 2030. With that increase, there will be market and operational pressure for propeller powered aircraft to not operate at Ontario. Cable’s one runway is too short for most business jets, but adequate for many piston aircraft. Accordin Riverside Municipal Airport Riverside Municipal Airport is located approximatel 12 miles southeast of Chino Airport. It is owned and

tivity at the airport has significantly increased since s jet operations.

2851-by-

ely 246 aircraft based at the airport, including 203 2 jet airplanes and 6 helicopters. The airport’s 189

According to SCAG, the airport is forfoadditional based aircraft. Brackett Field BFairgrounds, in La Verne, California. The airport is owned and operated by Los Angeles County. Brackett Field provides a parallel runway system, with one runway at 4,639 feet in length and the other 3,661 feet. Approximately 485 aircraft are based at Brackett Field, including 420 single engine airplanes, 48 multi engine airplanes, and 17 helicopters. Aircraft operations average 461 per day, or nearly 170,000 per year, of which 46 percent are local general aviation operations, 54 percent are transient aviation operations and 0.2 percent are air taxi operations. Tenants include NAI Aircraft Services, an aircraft maintenance service, and Blue Diamond Aviation, which offers flight training and aircraft rental services, and American Airports Corp, an FBO. Brackett has approximately 400 rentad The Federal Ava


Flabob Airport Flabob Airport is privately-owned public-use airport located approximately 13 miles east of Chino Airport and, built in 1925, is one of the older airports in America. Since 2000 it has been owned by a non-profit corporation dedicated to historic aviation preservation and aviation education. The airport is 81 acres in size and supports only small recreational aircraft due to the limited length of its runway. Flabob Airport has a single 3,200-foot runway and does not have control tower. There are approximately 202 aircraft based at the airport, comprised of 190 single engine airplanes and

ht sport aircraft businesses, as well as a light industrial park. he airport also plans to develop offices, shops and hangars of various sizes, most of which will have

dditional planned hangar space is planned in anticipation of an increasing umber of aircraft moving to the airport as a result of congestion, higher rental rates and closures at

The airport has no control tower.

f these, 73 percent are local general aviation operations and 27 percent are ansient general aviation operations. Since 2006, the City of Rialto has planned for the near-term

ialto Airport. Tenants have already begun relocating to other regional airports.

on Municipal Airport is located approximately 21 miles west-southwest of Chino Airport and is wned by the City of Fullerton. The airport has a single 3,121-foot runway. Approximately 385 aircraft

port is also in a built-out urban environment.

anta Monica Municipal Airport is located 50 miles west of Chino Airport and is owned by the City of anta Monica. The airport has a single 4973-by-150-foot runway. The airport is home to about 408

12 multi engine airplanes, with a waiting list for hangar space. Aircraft operations average 110 daily, or about 40,000 annually. Flabob airport is developing a business park on a recently purchased 10-acre plot of land bordering the airport to develop general aviation and ligTdirect taxiway access. The another airports. The hangars will be available for lease or sale. The airport is also building an aviation-friendly neighborhood called “Skypark at Flabob” on off-airport property. Rialto Municipal Airport – Micro Field Rialto Municipal Airport is located approximately 17 miles northeast of Chino Airport, and is owned by the City of Rialto. The airport has an intersecting runway configuration, with runways which are 4,500 feet and 2,650 feet in length. Approximately 251 aircraft are based at the airport, of which 215 are single engine airplanes, 10 are multi engine airplanes and 25 are helicopters. Aircraft operations at the airport average 82 per day, or about 30,000 per year. Otrclosure of the R Fullerton Municipal Airport Fullertoare based at Fullerton Municipal Airport, including 341 single engine airplanes, 34 multi engine airplanes and 10 helicopters. Aircraft operations at the airport average 222 per day, or about 30,000 per year. Of these, approximately 38 percent are local general aviation operations, 62 percent are transient general aviation operations, and less than one percent are air taxi operations. Fullerton is at capacity from a facility standpoint. As of 2004, all hangars were 100 percent occupied and tie-downs were 50 percent occupied. The air Santa Monica Municipal Airport SS


based aircraft, including 345 single engine airplanes, 53 multi engine airplanes, 7 jet airplanes and 3 elicopters. Aircraft operations average 452 per day, or nearly 165,000 annually, of which 61 percent

allenges that private operators have in n urban location. Hundreds of vocal residents have expressed concerns about pollution, safety and

percent are transient general viation operations, 33 percent are local general aviation operations, 25 percent are commercial perations and 5 percent are air taxi operations. Presently there is no hangar space nor tie downs

required to be placed on the waiting list for hangar space.

runway so that it can be used s a taxiway for the commercial aircraft.

spect to their ground leasing policies. Those practices are different for land that is leased to tenants for nd that is leased to tenants for non- aeronautical related activities.

ercent of gross

rate nged from 8 percent to 10 percent, with more toward the higher end of that interval. Non-aeronautical

ant or hotel development is often expressed as a percentage of gross venues collected. For example, Torrance Airport collects rent from shopping center owners equal to

hare transient general aviation uses, 30 percent are local general aviation uses and 7 percent are air taxi uses. Due to the heavy concentration of corporate and entertainment executives, fractional jet ownership operations have significantly increased at Santa Monica Municipal. A recent article in the L.A. Times dated 4-22-07 highlighted the chanoise. The local Assemblyman has introduced legislation to study pollution impacts from jets and turboprops at Santa Monica airport. John Wayne - Orange County Airport John Wayne Airport is located about 30 miles southwest of Chino Airport. The airport is owned by Orange County and is a commercial airport with a thriving corporate and general aviation base. Its two runways measure 5701-by-150 feet and 2887-by-75 feet. Aircraft based at the airport total 589, with 437 single engine airplanes, 84 multi engine airplanes, 60 jet airplanes and 8 helicopters. Aircraft operations average 959 per day, or about 350,000 per year. Of these, 38aoavailable, and there is a $150 deposit Many major corporations throughout Orange County depend on the airport for private, corporate and commercial flight needs. Its general aviation activity is mainly driven by businesses. Because of the small physical size of the airfield, it is now necessary to close the general aviationa

AIRPORT GROUND LEASE POLICIES

survey of representative airports in the southern California region revealed certain practices with A

reaeronautical activities and la Initial Ground Rent In most cases, the initial ground rent rate is usually set as a specified annual percent return on the value of the land, typically based on an appraisal. For aeronautical uses only, any potential value based on a non-aeronautical use is not considered. For non-aeronautical uses, the appraised value incorporated will be for the land’s highest and best use. There is a wide range in non-aeronautical land values from irport to airport. For some non-aeronautical uses the ground rent is specified as a pa

revenues produced by the non-aeronautical use rather than an annual percent return on land value. he rate of return on the land value that is the guideline for establishing the initial ground rent T

rause land used for retail, restaurre10% to 12% of the owners’ rent from their retail tenants. A land lease to a hotel operator at Montgomery Field in San Diego is specified as 8 percent of gross room revenues, plus 6 percent of gross food and beverage revenues. With percentage rents, a minimum rent is usually specified.



43 AUGUST 2007

For aeronautical use land, ground rents ranged from a low of $400 to $500 per acre per month to a high in excess of $2,000 per acre per month. Many fell in the $1,000 to $1,500 per acre per month. The higher rents prevail at airports which have the runway capacity to accommodate larger aircraft. There tends to be little variance in the ground rent rates at different locations at an individual airport.

nated for non-aeronautical uses, at rates from $6,100 per acre per onth to $9,200 per acre per month. The average rent is approximately $7,400 per acre per month.

he leases range from short term (month to month) materials storage agreements to long term (up to 50 tes. Camarillo Airport has 30 acres of non-aeronautical use

nd in what is designated an industrial park, that is leased at approximately $2,400 per acre per month.

ounts ften referred to as a “collar”). These provisions provide more stability and predictability for the lessee.

s from 10 to 30 years.

Lease Term

he most important factors in determining the duration of a ground lease are the amount of investment, i

ger are nstitutional lenders who finance the improvements of such projects.

The value of land for non-aeronautical uses varies widely based on the particular real estate market in which an airport is located. In addition, land for non-aeronautical uses can also vary widely based on where it is located at a particular airport. In a very high value real estate market, the Santa Barbara Airport leases 95 acres of land desigmTyears) agreements for industrial building sila Rent Adjustments All of the leases that are longer than one year in duration have specified periodic rent adjustments. For aeronautical use leases, the most common adjustment is an annual consumer price index (CPI) adjustment. For non-aeronautical use leases, the interval between adjustments is often longer than one year. In those cases, three to five-year intervals between adjustments are more common. It is also common for non-aeronautical use leases to have minimum and maximum CPI adjustment am(o In addition to CPI adjustments, it is also common to have periodic adjustments to the non-aeronautical use rents based on reappraisal. This type of adjustment usually occurs at a longer interval. The interval for reappraisal adjustments usually range

Tf any, required on the part of the lessee and the time over which the cost of any such investment must be amortized. The general rule is that the greater the investment required on the part of the lessee, the longer the duration of the lease. Leases in excess of 30 years duration were found when lessees were leasing the land as a site for an industrial building or facility. Leases of that duration or lonusually required by i Leasing Process No dominant process was found by which airport-owned land is leased. For larger tracts of land, a request for proposals (RFP) will be utilized. The RFP process involves a formal broadcast solicitation of proposals that usually include both uses and terms for the lease.

E 1 r g

eg po

AdjuAirport Inte

Montogomery Field 2.5 l 10 Sa

Brown Field 2.5 rst10

Torrance $ 1 An G h

Fullerton $ 7 An Aviati Av y

Burbank An illi5 y

Camarillo 5 5 y C er, Based on Annually

SCLA Victorville Ne tes Negotiate M ha

Santa Barbara -- Mercu ra y

xhibit VI-utical Leasin

ional Air

entstmentrval

yearsyears

years years

nual

nual

nualears

ears

d interval

Ae

RentAdjustment

Method

CPIReappraisal

CPIReappraisal

CPI: 3% - 5%

CPI: 3% - 5%

120 % of CPIReappraisal

Reappraisal6

CPI

--

onaR

Activity rt

LeaseTerm

40 - 50 years

40 - 50 years

30 to 50 years

30 Years 3

25 Years

40 years

5 Years 7

--

RRent

Amount 1

$0.47 2

$0.23 2

0.28 - $.04

0.61 - $0.7

$0.72 4

$0.42 FMV 10%

gotiated Ra

--

Key Tenants

Crown Air Aviation, NationaCorporate Helicopters of

San Diego Jet Center, Fi

reat American Aircraft, Sout

on Facilities Inc., Funoutside

Mercury Air Centers, M

amarillo: Cardinal Air Cent

aintenance, repair, and over

ry Air Centers, Santa Barba

Air Collegen Diego

Flight

Bay Aviation

iation Academ

on Air

Sun Air Jets

ul businesses

Flight Academ

Source: Airport Directors, Managers a and CBRE (1) Rent per square foot, per month (2) Rent based on appraisal of "marke n aeronaut(3) Up to 40 years in exceptional cases (4) Rent will be marked to market rate, appraisa are complete(5) Rents for aeronautical uses are cur .42 per sq These are eq % ical use F(6) Fair Market Value (7) With three 5-year options to extend

nd Staff;

t value" i

throughrently $0

Consulting

ical use

l, when improvements uare foot, per month.

d ual to 10

return the on aeronaut MV



Exhibit VI-2 N ty on-Aeronautical Leasing Activi

Regional Airports

Rent RentAcres Number Rent Adjustment Adjustment Lease

Airport Leased of Leases Amount 1 Method Interval Term

Montogomery Field -- -- Business Park: 10% Annual Appraised Value CPI 30 months 40 - 50 yearsOther: Higher of Minimum Rent or Reappraisal 10 years

5-8% of Gross Revenue

Brown Field 0 acres None n/a n/a n/a n/a

Torrance 147 acres -- Based on FMV 2 CPI: 3% - 5% Annual 30 - 50 yearsNon-retail: 8% Annually Reappraisal 3 10 Years

Retail: 10% - 12% of Gross Rent

Fullerton 0 acres None n/a n/a n/a n/a

Burbank 0 acres None Based on FMV n/a n/a n/a

Camarillo 30 acres -- $0.66; Based on FMV 10% Annually 4 Reappraisal 5 years 40 Years

SCLA Victorville 0 acres 5 None 5 n/a CPI Negotiated Interval n/a

Santa Barbara 95 acres n/a Based on FMV 10% Annually CPI: 3% - 8% 6 Annual 0 - 50 Years 7

Source: Airport Directors, Managers and Staff; and CBRE Consulting

ir Market Value

nd formerly part of Air Force Base. Currently, there is enough land available at for 65 million SF of improvements, which is listed for lease. The Master Developer is

(6) Reappraisal if rent "falls behind market rent" (7) On unimproved land, the lease term can range from month to month up to five years. On improved leases, terms periods are as required to amortize any tenant investment in improvements but not for longer than 50 years.

(4) Rent for aeronautical uses are currently $0.66 per square foot, per month. These are equal to 10% return the on non-aeronautical use Fa

(1) Rent per square foot, per month (2) Fair Market Value (3) With 150% max from prior market setting

Sterling Airports International (5) Non-Aeronautical la

VII. COMPARATIVE LOCATION ANALYSIS To determine the potential for attracting new employers to the Chino Airpo area i t to understand the strengths and weaknesses of the area compared to other c This section profiles demographic, economic, quality of life and cost of doing busin a e those Southern California cities with an airport. (i.e. Santa Monica, Long Beach, F r , nd El Segundo). This section examines the following attributes: workforce – availability, ind y ages; quality of life for prospective employees; and the real estate – occupancy, ec o costs for employers.

WORKFORCE A key location factor for a prospective employer is the availability of skilled o t industry sector. CBRE compiled statistics that compares the adult populatio w elor’s degree and the share of workforce in Service and FIRE sectors in each of the 6

Exhibit VII-1 Comparison of Education Attainment

and Workforce Concentration

Santa

Monica Long Beach

Fullerton Van Nuys

ElSegundo

rt airp

ulle

ustron

labn are

, it omme Va

teran

rcet

ino

ari

s immunsur

, anbusi

in thast B

poities

dne

e a

rtans. in

wss

relevanch

ort esston

pmi

r ithas.

C

O

n Nuys, a

nsd

le

o

atc

fo a

h&

ntEducation Attainment % with at least Bachelor’s Degree

54.3% 23.4% 30.7% 19.8% 41.

Workforce Concentration Share of Workforce in FIRE & Services Industry 59.8% 49.3% 46.0% 46.1% 52.

0%

5%

1

3

1.4%

0.1%

Source: Claritas, 2007; and, CBRE Consulting Our analysis reveals that Santa Monica has the most educated workforce among the 6 cities, and has the highest share of employees in Services sector employment. Chino/Ontario lags behind the other cities on both the parameters.

QUALITY OF LIFE Employee decisions to locate in particular cities are based on quality of living tof life parameters profiled in this analysis relate to education, crime, transit am i t of living, and housing affordability. Education CBRE examined the performance of the respective local school districts as a s API scores, and the college preparedness of its graduating students based on their 0

in en

sse 20

hosties

se4-

e,

d 05

athe

by S

re g

tA

as. Tene

heir T sco

hera

2re

quality l cos

006 s.


Exhibit VII-2

and College Preparedness Comparison of School Performance

California Santa

Monica Long Beach

Fullerton Van Nuys

El Segundo

Chino & Ontario

School Performance

API Score 720 818 724 791 656 847 722

College Preparedness

Average SAT Score 1,020 1,106 974 1,119 1,064 1,045 1,007

% Test-takers >1,000 54.0% 68.5% 45.9% 67.9% 62.8% 64.4% 52.7%Source: California Department of Education; and, CBRE Consulting

API The weightedth

score of combined Chino/Ontario school districts is equal to statewide averages, while

xhibit V-3 below compares the instances of violen ty crimes, as reported by the state Department of Justice for 2005.

C ris C es

California Monica

Beach FullertonVaNuys Segundo

hino & rio

e SAT scores of the graduating class are slightly below the state average. Crime E t and proper

Exhibit VII-3 ompaSanta

on ofLong

rime Rat

n El

COnta

Rate/100, 000 People

Violent C 526 9 82 253 434

Property 3 55 ,815 3,413 3,030 4,168 3,747

rimes 623 709 2 0 1

Crimes 3,323 ,9 2Sourc B ul

roximity to a regional passenger airport as an important parameter for business. Ontario International

most important location factors relates to the cost of living and average wages. Exhibit V-4 mpare the cost of living and salary indices for the 6 cities as benchmarked against the state average of

e: US Department of Justice; and, C RE Cons ting

Chino/Ontario rate of violent crime per 100,000 of population was well below the statewide figure, and those of Van Nuys, Long Beach, and Santa Monica. However, instances of property crime in Chino/Ontario are greater than the state average, though still below El Segundo and Santa Monica levels. Transit PAirport is less than 10 miles from Chino. Cost of Living One of the co100%.


Exhibit VII-4 Cost of Living Index

1125.0%

35.1%

12.3%

3.0%

131.2

111

65.0%

14

ndo Chino & Ont.

erage of 100%.

1

10

%

.9%

91.3%

95.0%

110.0%

0.0%

80.0%

50.0%Santa Monica Long Beach Fullerton Van Nuys El Segu

Chino/Ontario offers the lowest cost of living among the selected cities, and is the only place that has both the indices below the state av

Exhibit VII-5Salary Index

98.0%

100.1%

102.8

101.8%.3%

100.9%

94.0%

98.0%

10

Santa Monica Long Beach Fullerton Van Nuys El Segundo Chino & Ont.

rch Institute (ERI), 1Q 2007; and, CBRE Consulting

ng among the target geographies, and is the only place that as both the indices below the state average.

ousing Affordability

s profiled the sales prices of single-family homes and condominium units, as well as rental rates r apartments in each community. Not surprisingly, Santa Monica has the highest home prices and ntal rates. Chino/Ontario, on the other hand, is the most affordable location, as shown below.

100.0%

102.0%

4.0%

%102

96.0%

Source: Economics Resea

Chino/Ontario offers the lowest cost of livih H Employee location decisions are influenced by the quality and affordability of the local housing market. CBRE hafore


Exhibit VII-6 Residential Sales and Rental Rates

Santa

Monica LBeach Van Nuys

El Segundo

Chino & Ontario

ong Fullerton

For-Sale Median Price

Single-Family $1,586,255 $563,281 $654,769 $591,327 $837,000 $455,959

Condominium 739,495 361,381 405,272 353,218 537,000 344,261

Rental – Avg. Rent/SF

Apartments $ 4.06 $ 1.72 $ 1.63 $ 1.57 n.a. $ 1.41 Sources: Data Quick News; RealFacts; and, CBRE Consulting

REAL ESTATE COSTS One of the more primarily prominent issues for an employer is the real estate occupancy costs associated with the business. Depending on whether the occupier decides to rent or own its business premises, the lease rates and sales prices become an important factor in the location decision. Office Use

ca has the highest average rates for office space ases, and land & property sales price. On the other hand, Inland Empire locations – Chino/Ontario

have the lowest corresponding rates and pric

Exhibit VII-7 Comparison of Office Use – Lease and Sales Rates

Average Price/Rate Santa

Monica Long Beach

Fullerton Van Nuys El

Segundo Chino & Ontario

As may be expected, the supply constrained Santa Monile

es.

Annual Lease Rate - $/SF $40.11 $21.42 $22.77 $22.11 $23.88 $23.13

Land Price - $/Land SF 346.00 18.00 61.00 59.00 15.00 5.00

Property Price - $/Building SF 335 211 207 238 276 142Source: Costar Group, 1Q 2007; and, CBRE Consulting

Industrial Use Inland Empire industrial market is strong owing to the supply constraints in the nearby Los Angeles market. among the 6 locations. Also, the sales rice for industrial land and property are lowest in the region.

ce Use – Lease and Sales Rates

Rate Santa

Monica Long Beach



Accordingly, it has the lowest industrial space lease ratesp

Exhibit VII-8 Comparison of Offi

Average Price/

Annual Lease Rate - $/SF $22.31 $9.14 $6.26 $8.99 $13.25 $4.90

Land Price - $/Land SF - 18 - 44 36 10

Property Price - $/Building SF 257 125 105 142 193 90Source: Costar Group, 1Q 2007; and, CBRE Consulting


COST OF DOING BUSINESS Real estate occupancy costs, em cen re actors for any employer. Wages CBRE C the wage sentative et of occupation titles at various levels of organiz office and indus tab . W er rage wages bas itable mix of ndustrial uses. These averages are then weighted gainst the Chino/Ontario figures to derive a comparative wage index.

ve occupation titles by function include managers for marketing, HR,

, PR, and engineering (managerial function); buying agents, analysts, researchers, engineers, and

nance, assembler, and killed). Exhibit V-8 profiles the salaries of few representative occupation titles for office and rkers.

ach Fullerton Van Nuys

Segundo Ontario

ployee wages, local taxes, and business in tives a crucial f

onsulting compiled s for a repre sation in an trial es lishment e then d ived ave ed on suvarious occupations as relevant to office and i

a

For office workers, a few representatiITprogrammers (professionals); and, sales representative, administrative assistant, operators, clerks, and service representatives (sales & support). For industrial workers, the representative titles and categorization includes plant manager, supervisor, and mechanical engineer (skilled workers);

chnician, foreman, welders and mechanics (semi-skilled); and, shipper, maintetelaborer (uns

dustrial woinExhibit VII-9

Select Office and Industrial Workers’ Wages

Santa

Monica Long Be

El Chino &

OFFICE WORKERS

Managers

Financial $1 $ 7 $103,814 $103,576 $1 ,249 ,962

Purch ,523

9

53, 54 54 5 5 5 9

Su

Administrative Assistant 44,991 45,404 45,836 45,441 44,585 43,948

rk 25,635 25,644 26,185 25,876 25,482 25,153

0 135,918 134,174 128,618

Mechanical Engineer 79,821 80,926 80,014 80,322 79,260 77,453

Semi-Skilled

Foreman ,051 ,128

Qua ,573

41,60 41, 42, 41 41

25, 25 25 2 2 25 1

02,941

84,652

104,34

85,806

02

84,071

$97

80asing 85,402 85,174

Professionals

Financial Analyst 71,343 72,312 71,675 71,859 70,780 68,30

Accountant 788 ,483 ,326 4,317 3,239 1,69

pport

Office Cle

INDUSTRIAL WORKERS

Skilled

Plant Manager 135,072 136,949 136,23

50,568

37,832

51,19

38,082

7 51,199 51,076 50

37,524

50

37lity Control Inspector 38,341 38,213

Un-Skilled

Assembler - Office 9 965 42,159 026 ,244 ,293

Production Worker 547 ,556 ,525 5,785 5,395 ,29Source: Economics Research Institute (ERI), 1Q 2007; and, CBRE Consulting


The following exhibit calculates a normative wage index for the competitive cities relative to

hino/Ontario area.

Comparison of Office and Industrial Workers’ Wage Index

Santa

Monica Long Beach



CExhibit VII-10

Office Worker Wage Index

Relative to Chino/Ontario 103.4 104.6 104.4 104.2 101.6 100.0

Industrial Worker Wage Index

Relative to Chino/Ontario 101.9 102.2 103.2 102.8 101.0 100.0 Source: Economics Research Institute (ERI), 1Q 2007; and, CBRE Consulting

bit V-10 compares the business tax for a representative first $10 million in receipts for businesses located in these six locations. W ess taxes in Chino/Ontario are among the lowest within the 6 areas fo cturing uses.

E II-

We find that Chino/Ontario has the lowest office wages, but given the healthy industrial market, the industrial wages are highest among the 6 areas. Local Taxes Local taxes include utility, property, sales, documentary transfer, transient occupancy, business and other taxes. From an occupier perspective, business and utility taxes form a significant portion of their cost of doing business. Exhi

e find that the businr office uses, and lowest for industrial manufa

xhibit V 11

Comparison of Business Tax by Use and Location

12,5

00

$934 0

$13,

048

$1,0

50

$1,2

50

$12

,500

34

$1,0

45

3,04

8

$2,0

50

,000

0

Santa Monica Long Beach Fullerton Van Nuys El Segundo Ontario Chino

o

$

$61

$9

$11,

682

$1

$250

-

5,000

Tax

f

10

10

mil

15,000

rece

ip

20,00

r 1

st $

lion

ts

Office

Manufacturing$58

,50

9

Source: Rose Institute/Kosm f Do s Su ; an onsu

Econom Loca blish specia ss me s ain busi dictions. The me a ive elp e co ing busines the form of construction/infrastructure subsidies, tax discounts, waivers or reimbursements, or other financial assistances. CBRE Consulting has

ont Cost o ing Busines rvey, 2006 d, CBRE C lting

ic Incentives

l governments esta l busine develop nt zone or incentives to attract and retnesses in their juris se beco addition l incent s that h ease th st of do

s for various establishments. The incentives may be in


compared the presence of such special zones and economic incentives in each of the six target geographies to ascertain the most business friendly location. The following table summarizes whether the local public agency is likely (“Yes”) or unlikely (“X”) to offer such incentives.

Ex II-12 Comparison no t

and Special Zones

Ye YesInd Yes X Yes Yes

Yes X Yes Yes Yes YesYes X Yes Yes X X

Waivers or Reductions X Yes X Yes Yes Yes Xx Reimbursements or Abatement X X X Yes X Yes Yes

Utility Tax Discounts X Yes X Yes X n/a X

YesForeign Trade Zone X Y X Yes X Yes XOther Special Business or Incentive Zone X X Yes X X XRedevelopment Project Areas Yes Yes Yes X Yes Yes

hibit V of Eco mic Incen ives

Santa Monica Long Beach Fullerton Van Nuys El Segundo Ontario Chino

Economic Incentives

Business Retention/Attraction Program Yes Yes Yesustrial Development Bonds X Yes Yes

s Yes Yes

Land, Acquisition or Construction Subsidies X Yes Yes Yes X Yes YesLease or Tenant Improvement Subsidies X Yes Yes Yes X Yes YesOffsite Infrastructure Subsidies X Business License Tax Waiver or Reductions X Permit or Fee Property Ta

Financial Relocation Assistance X Yes X Yes X Yes Yes

Special Zones

Business Improvement Districts Yes Yes X Yes X Yes XOther Non-Residential Assessment/Tax Districts Yes Yes Yes Yes X Yes YesState Enterprise Zones X Yes X Yes X X XRecycling Market Development Zone X Yes X Yes X X

esYesYes

Source: Rose Institute/Kosmont Cost of Doing Business Survey, 2006; and, CBRE Consulting

CONCLUSIONS Each of the six locations was ranked for each economic or demographic factor discussed in this section. The attributes were assigned weights based on what a typical business will likely deem as most important location criteria. The weighted average rankings were aggregated to derive a composite score for each community. Exhibit V-13 gives the rankings of individual parameters for each of the cities, and the respective weights assigned to each. Our analysis reveals that Santa Monica has the most educated workforce among the 6 cities, and also the highest share of employees in Services sector employment. On quality of life parameters, El Segundo has the best performing school district based on API scores and is also the least crime prone city. The Chino/Ontario salaries meet the California state average. The Chino/Ontario area state occupancy

sts are also the lowest. ess est in Chino/Ontario.

is ahead of the other cities on housing affordability. Its real eThe cost of doing business, influenced by economic incentives and the businco

taxes, are the also low The Preserve housing development with its wide variety of workforce and executive housing at reasonable prices (~$200/sf) is a significant benefit to corporate relocations. However, the proximity of such housing to the airport boundaries present challenges to growth of flight operations due to noise issues.


Exhibit VII-13 Ranking and Weights by each Location Parameter

Long Fullerton Van Nuys El Segundo

Chino & Ontario

DEMOGRAPHICS

Education - % with Bachelors Degree 2 3 2 4 1 Share of Workforce in FIRE & Services Secto

KEY INDICES' RANKING 1 WeightSanta

Monica Beach

2.5 5 r 1.5 5 4 3 3 4 2

QUALITY OF LIFE

Education - API Scores 2.0 5 3 4 1 5 3 Education - SAT Scores 2.0 5 3 5 4 4 3 Crime - Violent Crimes 2.0 3 3 5 2 5 4 Crime - Property Crimes 2.0 3 5 4 5 2 3 Transit Amenities - Distance to Airport 2.0 4 3 3 3 5 5 Cost of Living Index 2.5 2 3 4 2 3 5 Salary Index 3.0 4 3 4 3 4 5

REAL ESTATE COSTS

Office Vacancy Rate 1.0 4 3 5 4 1 2 Office Lease Rate 3.0 2 5 4 4 4 4 Commercial Land Value per SF 3.0 1 4 3 3 4 5 Office Property Sale Price per SF 3.0 1 4 4 4 3 5 Industrial Vacancy Rate 3.0 4 4 3 5 4 3 Industrial Lease Rate 3.0 1 4 5 4 3 5 Industrial Land Value per SF 3.0 1 4 2 3 3 5 Industrial Property Sale Price per SF 3.0 1 4 5 4 3 5

RESIDENTIAL AFFORDABILITY

Single Family Median Sale Price 2.0 1 4 3 4 2 5 Condominium Median Sale Price 2.0 1 4 3 4 2 5 Average 4 3 5

OST OF DOING BUSINESS

Wages - Index for office workers, with Chino as base 3.0 3 3 3 3 4 5 Wages - Index for industrial workers, with Chino as base 3.0 4 4 4 4 4 5

ce Business Taxes 3.0 3 4 5 1 3 4 Taxes - Industrial Business Taxes 3.0 2 4 5 1 2 4

Apartment Rent per SF 3.0 1 4 4

C

Taxes - General Offi

Incentives - Number of Business friendly programs 3.0 2 5 3 5 2 4

Source: Claritas; CA DOE; US DOJ; ERI; Costar; Rose Institute/Kosmont Cost of Doing Business; DQ News; RealFacts; and CBRE Consulting.

(1) The indices are ranked relative to the most favorable location among the 6 cities. A rank of 5 represents most favorable location, and 1 the least.

verall, we find that Chino/OntarioOp

has the highest weighted average rankings across the location

Fullerton Van Nuys El Chino &

arameters, as shown in table below (each City is expressed as a ratio relative to Chino/Ontario score).

Exhibit VII-14 Composite Rank Score and Index

Santa Long Monica Beach Segundo Ontario

Composite Score

Weighted Total Score 163.0 239.5 243.0 208.5 212.5 268.0

Composite Index

Relative to Chino/Ontario 0.61 0.89 0.91 0.78 0.79 1.00 Source: CBRE Consulting


VIII. LONG-TERM ECONOMIC BENEFITS

OVERVIEW One of the key objectives cited by the County is to increase lease revenues and tax revenues, as well as employment opportunities to the County. This section of the report demonstrates the significant benefits associated with new airport development, as compared to the typical warehouse industrial use.

REVENUE COMPARISON OF AIRCRAFT FACILITIES VS. INDUSTRIAL DEVELOPMENT To illustrate the benefits of non-aeronautical commercial/industrial development, CBRE Consulting has compiled a theoretical analysis of direct annual tax revenues generated from typical industrial use versus airplane hangars and other aeronautical tenants. Key Assumptions include:

- Property taxes are at 25% of the 1.0% basic rate to County - Ground lease rent is $0.24 per square foot for aeronautical use - Ground lease rent is $1.20 per square foot for non-aeronautical use

Exhibit VIII-1

Annual Revenue to San Bernardino County Alternative Land Uses at CNO

Hypothetical 10 Acres Industrial T-hangars Corp. Jet Hangars Building area 250,000 250,000 250,000Assessed Value per Bldg Sq.Ft. $150 $40 $60Assessed value of Equipment $10 million $10 million $100 millionTotal Assessed Value $50 million $20 million $115 million County Property taxes @ 25% $125,000 $50,000 $300,000Lease revenue $500,000 $100,000 $100,000 Total Revenues $625,000 $150,000 $400,000

Source: CBRE Consulting The table shows that industrial development cess airport land will generate fiv greater ground lease reven es than any aer l u ow jets, the property tax revenues to the County from high-end j will exceed most industr l uses.

CITY E

r the in CBRE has prepared a simplified economic benefit analysis to show City revenues and jobs than can be created from various types of industrial use, as shown below:

on exse. H

e times rporate u onautica ever, due to the high value of co

et aeronautical uses ia

CONOMIC BENEFIT

Fo dustrial area outside CNO,the


Economic Benefits Warehouse vs. Industrial Use (2007$)

Hypothetical 100 Acres Warehouse Manufacturing R&D

Exhibit VIII-2

Building area 2,000,000 2,500,000 3,000,000Assessed Value per Bldg Sq.Ft. 40 60 150Assessed value of Equipment $50 million $150 million $75 millionTotal Assessed Value $130 million $300 million $520 million City Property Taxes @ 10% $130,000 $300,000 $520,000Permanent Jobs 400 5,000 10,000 Business Sales Taxes /1 $200,000 $1,000,000 $500,000 Retail Spending @ $10,000/job 4,000,000 5,000,000 $100,000,000Retail Sales Taxes $40,000 $500,000 $1,000,000 Total City Revenues $370,000 $1,800,000 $2,020,000

he table above illustrates that with zoning restrictions to limit warehouse development in the Chino

Airport area, the City stands to gain an additional $1.5 million every year in tax revenues.

ONCLUSION Ind t to any region my. Chino rea is well cap h demand, spur ns of new l/indust ent and creating thousands of new jobs for a wide r ucational els.

/1 Reflects manufacturing site as point of sale for retail sales taxes Source: CBRE Consulting

T

C

ustrial employment is imporf t

tan al econo Airport a positioned toture a significant share o is ring $millio commercia rial developm

ange of ed and skill lev


IX. CNO R E ASSETS

HINO AIRPORT LEASES CNO currently has almost 100 different lessees, ranging maintenan s for agricultural purposes. Although the primary real estate activity is land leasing, the Airp ns s ircra that they inherited a d. The vas majority re sh ex es before 2010. There are approximately ten leases ith expiration dates beyond 2025. Ground Le The groun ate is set by periodic appraisals of the land, which is schedu d for update soon. The current lea ot per m equa e value of approxima e foot, well below cur strial la in Hangar space is leased to private plane owners at a rental rate of $0.25 to $0.30 p g area per m space is leased at $1.00 e foo

ic set at 20 years with two 5-year options, and the building improvement ould revert to the Airport at termination. With today’s higher construction costs, the Airport has adopted

Lessees have sought 40 to 50-year lease terms for higher quality construction, but the Airport’s t is better to have an adequate but slightly lower quality facility and get the property

provements back within 30 to 40 years, so the hangars can be released directly at five to ten times the round rent.

The Chino Airport Master Plan was prepared by Coffman Associates, Inc. in December 2003 and designates aviation and “aviation-related” commercial/industrial land uses for the entire airport to accommodate the expected growth in aviation demand for the next 20 years.

Future Aeronautical Facilities Requirements An integral part of the plan examined the long-term demand trends for aeronautical use locally, regionally and nationwide. Estimating the amount and nature of future aeronautical facilities required begins with a projection of the increase in airport operations and activities. Key aspects of the operations that will have a bearing on facilities requirements are the total number and type of aircraft based at Chino. Table 2J in the Master Plan presents a range of forecasts of the number of aircraft that are expected to be based at Chino by 2025. As of today, there are approximately 1,000 aircraft based at Chino, of which approximately 200 are vintage planes in the museums. The baseline forecast used in the Master Plan estimated that 1,375 aircraft will be based at Chino by 2025. That represents an increase of 375 aircraft or 45 percent growth of non-vintage planes. The highest forecast estimated an increase of 480 aircraft or

EAL ESTAT

C

from 0.5 acre parcels leased to the County for ce facilities to 192 acres leased to LaBrucherie Farm

ort also ow everal old a ft hangars s old lessees expire t of leases a ort-term with piration dat

w

ase Terms

d lease r lese rate is $0.023 per square fo onth. This tes to a “fe simple” landtely $3.50 per squar rent indu nd values the region.

er square foot of buildinonth, while office per squar t per month.

Histor ally, lease terms were wa policy of providing a lease term of sufficient length to allow the operator to recoup there investment with a 9 percent annual return on investment.

philosophy is iimg

CHINO AIRPORT MASTER PLAN



57 AUGUST 2007

60% growth by 2025. The Mastwould increase from 64 in 2001 increase of 48 aircraft or 75% growth. Those larger aircraft require both larger han er space than smaller general aviation aircraft and also more extensive ground support services.

ased on the projection of additional aircraft hangar demand, The Master Plan identifies the amount of

ny aircraft could be ndard size Erect-A-Tube hangers. It is estimated that four to five large jets or smaller general aviation aircraft can be accommodated for every 40,000 square

repared

nautical Land Availability

er Plan also forecast that jet and turbo prop aircraft based at Chino to 112 in 2025. That represents an

g

Bnew hanger space and tie-downs that would be required. It was estimated that an additional 333 hanger spaces and seven new tie-downs would be required, and the land necessary to construct those new facilities was identified in the Master Plan. Discussions were held with Bill Ingraham, Airport Manager and Erect-A-Tube, one of the nation’s largest

anufacturers of pre-engineered steel aircraft hangers, regarding how mamaccommodated in stapproximately a dozena

foot hangar. Allowing for runway access and other circulation, and considering the strong demand by large jets, it was conservatively estimated that the Airport would need to set-aside one acre of land for every four planes to be permanently housed. Because of the restrictions on jet operations at Santa Monica Airport and the lack of any available angar space at most general aviation airports in Los Angeles and Orange County, CBRE has ph

a series of very optimistic projections of CNO-based aircraft demand to determine if there is still land available for “aviation-related” commercial/industrial uses.

Exhibit IX-1 CNO Non-Aero

Active Planes

Growth RateCNO Active

Aircraft - 2025All CNO-based Aircraft - 2025

Excess Land Available

Master Plan Baseline 46% 1,175 1,375 140 acres Alt #1 50% 1,200 1,400 135 acres A #2 60% 1,280 1,480 115 acreslt Alt #3 75% 1,400 1,600 85 acres Alt #4 100% 1,600 1,800 35 acres

Source: CBRE Consulting The analysis shows that allowing for an optimistic growth rate of 75 percent will still allow development

mmercial and industrial development based on the tio that every 4 planes require one acre of land for hangar space and runway access.

he aviation-related commercial land area currently identified is shown on the Master Plan aerial on the

of approximately 85 acres for “aviation-related” cora It is important to note that the Master Plan defines “aviation related commercial/industrial uses as land that has no airfield access and thus can be used for “alternative uses which enhance airport operating revenues”, and which can include “manufacturing, warehouse, office and retail uses”. Tfollowing page.


Chino Airport – Master Pla tions n Designa

X. STRATEGIC PLAN & RECOMMENDATIONS Through proper planning that encourages light industrial, manufacturing and R&D development, the Chino Airport (“CNO”) and surrounding undeveloped land will be a valuable asset for San Bernardino County. The Airport, if improved with quality FBO’s and large jet hangars will provide an excellent opportunity to achieve economic development goals for the County, the cities of Chino, Ontario and other nearby communities, by providing significant employment opportunities and substantially increasing tax revenues.

RECOMMENDATION #1 – Update Appraised Values for CNO Land

Current land leases within CNO are based on below market lease rates of $0.023 per square foot per month set several years ago. Market values for industrial land have increased substantially in the area, of g an opportunity to increase airport revenues by close to $1 million per year. RECOMMENDATION #2 – Work with Chino and Ontario on Master Plan for 1,000 Acres outside CNO O search found that Scottsdale Airport in Arizona has developed into a national model for airport-ba business parks, having been achieved through the efforts of City of Scottsdale community leaders, access to a sizeable regional employment base and the City’s zoning of the surrounding area. Scottsdale Ai t/Airpark is headquarters for over 25 national and regional corporations; home to more than 2,200 small to medium-sized businesses; and a workplace for more than 42,000 employees. With the tremendous development occurring in the area, Euclid Avenue, the western airport boundary, is becoming a major commercial thoroughfare. With the new housing and business development, additional retail and lodging facilities will be needed and would be well-suited for the intersections at M and Kimball Avenues. The land adjacent to the airport is subject to State mandated airport land use planning requirements, as well as numerous planning efforts which have been initiated (i.e. New Model Colony and The Preserve). To maximize the economic benefits from the airport and the regional growth trends, CBRE recommends a co-ordinated planning effort to encourage more business park/light industrial and commercial uses to take advantage of the airport, as well as provide needed services for airport tenants. We also recommend prohibiting large-scale warehouse/distribution centers, except in runway approach zones, where number of employees is restricted, to minimize truck traffic and increase employment and tax revenue opportunities. RECOMMENDATION #3 – Realign Certain Land Uses in CNO Master Plan The substantial single-family housing development that is occurring on the south side of the airport along Kimball Avenue presents challenges to future airport growth. The current Master Plan envisions significant aviation activity along the south side of the main runways. CBRE recommends a redesign of the Plan, concentrating non-aeronautical uses along the southern edge with Kimball access and relocating existing and future FBO and private hangars to the northwest and northeast side of the airport.

ferin

ur resed

rpor

errill


As part of the Plan update, it may make sense to relo wo aircraft museums from the north side to the southeastern section to provide a significant buffer from the immediately adjacent homes.

ECOMMENDATION #4 – Update CNO ALP With up to 100 Acres of Commercial/Industrial Land

iven the Airport’s mandate to provide for growth in aeronautical needs for the long-term, it is prudent y from the high-end corporate jets

proximately 70 acres f the commercial/industrial designated land located on the western end of the Airport that is least

ince the future development opportunities are hard to predict, it may be prudent to initially release only

cate the t

R The Master Plan designates approximately 140 acres of land for commercial or industrial uses, based on having identified the amount of land that would be necessary to accommodate the projected increase in aircraft operations based at Chino by 2025. This land could be made available to commercial or industrial users via market rate ground leases, once the ALP is updated and an FAA de-obligation process has been completed. Gto anticipate even greater growth in aeronautical demand, especiallthat are being squeezed out of Los Angeles and Orange County airports. Even allowing for as much as 75 percent growth in active aircraft at CNO, CBRE believes that it would be prudent to develop a commercial/industrial leasing program the focuses on the aposuitable for aeronautical use. S30-40 acres for immediate development of a light industrial business park along Kimball Avenue. A neighborhood 10-acre retail center would be a likely candidate for the intersection of Euclid and Kimball. For such non-aeronautical ground leases, the County should coordinate planning and marketing with the City of Chino Economic Development department to avoid competing for similar uses and to incorporate ny economic incentives available to potential developers/tenants.

per 1,000 square feet of building area and a private investment target of $3 illion per acre. An exception could be made for large warehouse users that are large point of sale

a RECOMMENDATION #5 - Develop RFP Protocols for Soliciting Development at CNO For all major leases on the airport, CBRE recommends CNO develop Request for Proposals (“RFP”) to solicit the most qualified developers and financially advantageous lessees for development and to focus development proposals in specific geographic areas that can be served efficiently from existing infrastructure systems. For non-aeronautical land uses, the cities and the County should establish minimum guidelines for job creation, private investment and tax revenues to prevent large distribution centers or other types of warehouses from taking the valuable industrial land for low value uses. CBRE would suggest a minimum threshold of 1.5 employeesmretail sales tax generators (i.e. in excess of $50 million in annual sales). Attached on the following page is an illustrative example of such a planned developer solicitation that was prepared for surplus land at the Ontario Airport. .


Sample RFP – Ontario Airport


27679370 Economic Development Strategy Chino Airport

Documents

Transcript of 27679370 Economic Development Strategy Chino Airport